Many people have asked me if the pharmaceutical sector has reversed, because I have been promoting medicine for three months, and many people are concerned about medicine. Let me share my thoughts with you.
Warning: what follows is my subjective opinion, read with caution! This article is not dry goods.
First, prediction markets are meaningless . For example, in the past two days of US stocks, after the CPI was higher than expected on Thursday, US stocks opened more than 3% lower, and then reversed dramatically, from negative three to positive three. Most people think that the miracle day has bottomed out. At the time when U.S. stocks were rising, I posted that the fundamentals and monetary policy of U.S. stocks were not enough to support the current valuation, so U.S. stocks would continue to fall. On Friday, U.S. stocks started to open higher and lower. So the shorter the term, the more difficult it is for the market to predict.
1. From the perspective of the positions of public funds , the proportion of allocation of new energy is at a historically high level, and then the allocation of medicine is at a historically low level. From the perspective of holding a group, it can be considered that it will switch between high and low, run away a little bit of new energy, and buy medicine. From this perspective, medicine wins.
2. From the perspective of retail investors , medicine has been adjusted for more than a year, and there are a lot of lock-ups, and the scale of well-known medical funds such as Gelan has been bought into hundreds of billions of dollars. The biggest characteristic of retail investors is that they like to break even, which has put enormous pressure on the rise of medicine. There are indeed few new energy retail investors, mainly because retail investors like to buy more as they fall. Generally speaking, when the fund falls, more people buy. In this regard, new energy wins.
(Additionally, it is precisely because retail investors can’t hold it that they like to break the capital, and China Securities Medical will not sell if it does not triple to the overvalued range)
3. In terms of news , the story of the rise in medicine is the new medical infrastructure, and the money is spent to buy medical equipment, so the medical equipment sector will benefit the most. But this information was available 3 months ago: I mentioned the market size of new medical infrastructure in my article on Mindray Medical on July 19 ( web link ). It remains to be seen whether this replay of the old tune is forcibly looking for a reason for the rise.
Hengrui Medicine and CXO are both innovative drug industry chains. The good news may be that the new indications of innovative drugs are included in the simple renewal, and the price reduction will be smaller than expected. In addition to the centralized procurement of innovative drugs, the price reduction for the purchase of spinal cords was better than expected, and the fluctuation of oral tapes in service fees was also better than expected. This will help to repair the valuation of the innovative drug sector. I just forgot to add it, sorry.
Regarding the news of new energy, the United States suspended photovoltaic tariffs, indicating that new energy is my country’s advantageous industry, and the United States has temporarily waived sanctions. This is a real benefit. At that time, the bad news caused the photovoltaic sector to drop by nearly 7% in one day.
4. Valuation (important), the low valuation of medical care is well known and will not be repeated.
Rigidly speaking, the valuation of new energy is not high, the overall new energy sector has entered the underestimated range, and the photovoltaic sector is at the critical point of undervaluation, but new energy vehicles are still overvalued, and there are also overvalued sectors in medicine, such as traditional Chinese medicine. The reason behind the undervaluation of new energy is its rapid growth in performance, which quickly digests the high valuation. The Tongwei shares and TBEA of the fat tiger next door @five small targets are all single-digit price-earnings ratios.
In fact, the reasons for the underestimation of medical and new energy are similar, and the common reason is the rapid growth of performance. New energy will enter the performance realization stage in 2022, and the valuation has dropped sharply. The performance growth rate of some companies has reached 200 to 300%. Medical treatment is similar. Some medical devices benefit from the detection of the new crown, their performance has surged, and their valuations are extremely low. For example, Jiu’an Medical, and then CXO and innovative drugs, benefit from my country’s relaxation of the standards for innovative drugs, and then large-scale expansion of production. , or benefit from new crown research and development, such as vaccines, new crown drugs, etc.
Of course, compared to new energy, medical treatment must be a category of oversold, which is understandable. For new energy and medical care, their common question is how many companies can survive after innovative drugs, as well as new energy vehicles and photovoltaics. After going through the golden growth period of performance, how many of these companies can maintain the same high-speed growth as before based on the current high base? Especially under the premise of the global economic recession and weakened external demand, how many pharmaceutical or new energy companies can grow rapidly against the trend, this is what everyone has to think about.
5. From the perspective of logic realization, I am more inclined to think that medical logic realization is a long-term logic, because the development of innovative drugs and the progress of pharmaceutical companies require a lot of time, and aging is not a rapid thing, so medical treatment More is to do a long-term of about three years, the goal is to triple the income, or even longer. The new energy is in the stage of rapid realization of performance, and there are also catalysts for the conflict between Russia and Ukraine and the energy revolution, and the increase may be even greater in the past year.
Everyone has to choose according to their own investment philosophy. Do you like new energy with high prosperity, or medicine with low valuation and oversold?
6. Let me tell you two facts. The Hang Seng Technology Index of Hong Kong stocks and the corresponding Hang Seng Technology ETF have three daily daily limits on March 16, March 17, and April 29, 2022, but then fell below the previous low. The daily limit failed to stop the decline three times, and the daily limit of medical treatment does not explain much. In turn, the new energy sector went out of the market after the daily limit on April 27.
Summarize
Medical care and new energy have their own advantages and disadvantages. Don’t try to predict the short-term market, do a good job of diversifying investment, underestimate investment, and don’t chase up and down. Determine your own investment philosophy, for example, whether you prefer high prosperity new energy or low valuation and oversold medicine.
Being optimistic about medicine does not mean you have to blow your mind without thinking. It’s like falling in love. You can’t spoil each other, but you need to find each other’s mistakes in time and make progress together. I hope you all understand me.
My personal feeling is that new energy is still too crowded, and medical care is still in the early stage of valuation repair. Since many sub-sectors are favorable, the current medical care will still be more cost-effective. But no one knows what happened next.
$Hengrui Medicine(SH600276)$ $Minray Medical(SZ300760)$ $Ningde Times(SZ300750)$
#Will the fund manager relocate medicine from new energy? # #The medical and medical sector has risen sharply across the board. Is the inflection point coming? #
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