On Monday, the Hong Kong stock market remained volatile throughout the day, with only biomedical and related concept stocks strengthening collectively, leading the technology index to rise.

On Tuesday, pharmaceutical stocks made efforts again at noon, among which the pharmaceutical outsourcing sector led the market. By the close, Wuxi Biologics was up more than 6 per cent, having previously risen nearly 10 per cent; Pharmaron Beijing Co., Ltd.* was up more than 7 per cent.

Recently, the pharmaceutical sector has warmed up quietly.

In the week of June 29, the Hang Seng Index rose 3.06%, while the Hong Kong stock health care sector rose 13.02%, significantly better than the Hang Seng Index. Last week, the medical sector made a slight correction, but climbed again this week.As of press time, the only ETF that tracks the Hang Seng Healthcare IndexHang Seng Medical ETF (513060.SH) $It has rebounded nearly 40% since its May low, and sentiment in the pharmaceutical sector has improved significantly.

In terms of news, the regulations on the implementation of the Drug Administration Law (draft revised draft) issued by the State Drug Administration recently completed soliciting opinions, which was overhauled for the first time since its implementation on September 15, 2002. it has increased from 80 articles of more than 12000 words to more than 29000 words. A number of industry insiders believe that the draft encourages drug innovation from many angles, including institutional dividends, industry promotion and so on.

For the collective rebound of pharmaceutical stocks, Tianfeng Research pointed out that the current period of medicine is at the bottom, especially the innovative drug industry chain, medical services, traditional Chinese medicine and so on. It is also pointed out that Hong Kong stocks have rebounded at the bottom of the Hang Seng Healthcare Index, and innovative drug financing has also begun to show marginal improvement, and it is expected that the follow-up may gradually change from the negative cycle of the past year to a positive cycle of "stock price repair → financing margin improvement → stock price further rebound → financing continues to improve".

The pharmaceutical sector of Hong Kong stocks performed poorly in the first half of the year. Now that the plate is quietly warming up, does it mean that the market of "taking medicine" is coming back? Which industry segments are more worthy of attention?

Guosheng Securities: medical risk preference is going up, grasp the time point of gold allocation at the bottom of medicine

Guosheng Securities pointed out that since June, the pharmaceutical repair process has begun. Last week, the market gradually showed signs of "high and low cut" transformation, consumer medicine began to strengthen, the medicine at the bottom of the long cycle has a comparative advantage, so it is strong upward.

Looking forward to the future, Guosheng Securities believes that the pharmaceutical risk preference is going up, positive and optimistic, from the medium-and long-term dimension, this is the beginning of repair, when the pharmaceutical market attention shrinks, once the medical wind tends to go up, medicine is expected to show a state of multi-segment changes.

Lines that can be followed in the near future:

Previous negative expectations over-interpreted the oversuppressed oversold core asset line (expected to continue),

China report performance line (looking for short-term expectation difference), traditional Chinese medicine formula granules (Q3 is expected to continue to perform),

Reform of state-owned enterprises (state-owned pharmaceutical Hyundai began to increase to major shareholders, it seems that more and more actions of state-owned enterprises),

Special medical services (repair is not enough), large items, flu and so on.

Guosheng Securities also said that in the second half of the year, it is expected to see the normalization of collection, the new version of health insurance catalogue and health insurance negotiations, as well as the landing of price adjustment of medical services in some provinces and cities. The current cycle of traditional Chinese medicine policy began in 2019 and is long-term and sustainable. The continuation of the policy in the second half of the year is a high probability event.The rebound of consumer health care is a long-term trend, and the core point in the medium and short term is a psychological game, which can be more optimistic.

Tianfeng Securities: the current position of the growth plate is strategically optimistic about medicine.

Tianfeng Securities pointed out that a number of indicators guide the long-term bottom position of the pharmaceutical sector, but more importantly, changes in fundamental expectations are already taking place:

First of all, from the perspective of public offering fund positions, the proportion of over-allocation of medicine is relatively low in the past 10 years, indicating that the excess return is also at the bottom of the historical level.

Secondly, from the point of view of valuation, Pharma is currently near the-2X standard deviation of the spread between stock and debt returns, which implies a relatively pessimistic expectation.

Finally, pessimistic expectations of policy and fundamentals are basically reflected in stock prices, and some positive short-term changes are guiding the pharmaceutical sector out of the bottom area.

The current position of the pharmaceutical sector, the probability of a variety of potential risks in the second half of the year has a good immunity, can attack, retreat can defend.

If the global epidemic is repeated, or if the new mutated virus spreads obviously, then the further updating of vaccines and specific drugs cannot be ruled out, which is not a bad thing for the innovative drugs and vaccine industry chain.

If the higher-than-expected CPI raises liquidity concerns, or if the overseas recession leads to greater pressure on the domestic economic recovery, there is a good chance that the pharmaceutical sector can also play a defensive role, especially given the current positions and valuation positions of the pharmaceutical sector.

Shen Wanhongyuan: optimistic about head CXO, biotech with innovative R & D capabilities, and characteristic private medical service institutions.

Shen Wanhongyuan believes that the health care reform policy continues to land, the scope of procurement of drugs and high-value consumables continues to expand, health insurance negotiations are normalized, R & D innovation is continuously encouraged from drug review, approval, payment, and so on, and innovative R & D capability has become the core driving force of enterprises.

Under the background of medical insurance fee control, we are optimistic about the head CXO company, the biotech company with innovative R & D capability, and the characteristic private medical service institutions. In terms of specific targets, recommend$Wuxi Biologics (02269.HK) $、$Kangfang Bio-B (09926.HK) $、$Rongchang Bio-B (09995.HK) $、$Nuocheng Jianhua-B (09969.HK) $、$Jinxin Reproduction (01951.HK) $、$CSPC Pharmaceutical (01093.HK) $。

Anxin Securities: pharmaceutical innovation is still the main theme in the long run.CXO industry has the performance-price ratio of configuration.

With regard to the pharmaceutical industry, Anxin Securities believes that while seizing the opportunity to repair the valuation of Hong Kong stocks, it is recommended that the layout of prosperous racing tracks and oversold core assets should be paid attention to in the future:

1) innovative drugs:Legend Biotech Corp CART's successful approval in FDA is an excellent precedent for innovative drugs to go to sea, and pharmaceutical innovation is still the main theme in the long run. It is suggested that we should closely follow the progress of overseas clinical trials of relevant enterprises and pay attention to the overseas market space of relevant potential varieties. Suggest to pay attention to$INNOVENT BIO (01801.HK) $、$Kangfang Bio-B (09926.HK) $等。

2) Medical devices:In the short term, the market is more pessimistic about the equipment collection, and the performance of related targets is relatively low; in the long run, there are many board tracks, molecular diagnosis and minimally invasive robots and other sub-tracks have great potential, leading enterprises and innovative enterprises have barriers.

It is suggested that we should pay attention to the high-quality targets of the robot track.$minimally invasive robot-B (02252.HK) $And cancer early screening.$Nuohui Health-B (06606.HK) $Ophthalmology AI screening for high quality targetsEagle pupil Technology-B (02251.HK) $。

3) Medical services:The penetration rate of medical service is low, and the prospect of demand growth is broad. It is suggested that attention should be paid to the target of oncology medical service.$Hagia Medical (06078.HK) $The first stock of hair transplant in Hong Kong stockYonghe Medical (02279.HK) $等。

4) CXO:At present, the valuation of the CXO industry is relatively reasonable, with a cost-effective configuration, the domestic industry chain has a global competitive advantage, benefiting from the growth of downstream demand at home and abroad, the industry boom can be sustained. Recommend the leader of integrated industry in the long run$Wuxi Apptec (02359.HK) $、$Pharmaron Beijing Co., Ltd.* (03759.HK) $，$Wuxi Biologics (02269.HK) $。

5) Vaccine and COVID-19 treatment:The epidemic cycle is higher than expected, and the demand for epidemic prevention is still great. Vaccine recommendation attention$CANSINOBIO (06185.HK) $、$clover organism-B (02197.HK) $COVID-19 suggested to pay attention to therapeutic drugs.$Junshi creature (01877.HK) $、$Xiansheng Pharmaceutical Co. (02096.HK) $、$Golly Pharmaceuticals-B (01672.HK) $等。