Yesterday, Hong Kong stocks opened low and rose quickly at the beginning of the session, with the Hang Seng Technology Index rising nearly 5 per cent at one point, then falling slowly and maintaining shock in the afternoon. By the close, the Hang Seng Index closed up 1% at 15317.67, the Hang Seng Technology Index rose 2.48%, and the Hang Seng China Enterprises Index rose 0.72%. The full-day market turnover was HK $130.751 billion, with a net purchase of HK $5.06 billion from southbound funds.

Hong Kong stock health care index rose sharply, leading the rise in the Hang Seng industry index. Apart from the overall rebound in the Hang Seng Index, on the whole, we believe that multiple factors support the upward momentum at the bottom of the pharmaceutical industry. From a policy point of view, the cold air of the industry policy has sharply reduced and is expected to continue to improve: the better-than-expected previous relevant policies continue to drive the plate up: for example, the moderate price control of dental implant services and the better-than-expected collection of spinal consumables, while the winning rules of the inter-provincial alliance of liver function biochemical testing reagents in the IVD industry are relatively mild. We believe that the sharp decline in the cold of industry policy is expected to continue to improve.

From the performance point of view, A-share three quarterly results have been disclosed, with Wuxi Apptec (603259.HK/3259.HK) as the representative of CXO performance to maintain rapid growth, long-term fundamentals of the industry, full short-term adjustment. In addition to CXO, there is no lack of sub-tracks with high performance in the pharmaceutical sector. From the point of view of the adjustment range, the previous plate adjustment is relatively large, and the overall valuation of the plate after the price return tends to be reasonable or even underestimated.

In the long run, we believe that innovation remains the same theme in the future. While seizing the opportunity to repair the valuation of Hong Kong stocks, it is suggested that the layout of the prosperous race track should be paid attention to in the future:

1) innovative drugs: innovation is still the main theme, we need to closely follow the progress of clinical trials of relevant enterprises and pay attention to the volume of potential varieties. It is suggested that we should pay attention to the high-quality innovative pharmaceutical companies with strong cooperation in pipeline layout, with core technology platform and abundant cash flow, such as 9926.HK, INNOVENT BIO, 9969.HK and 9966.HK.

2) Medical devices: the early market is more pessimistic about device collection; recently, the Medical Insurance Bureau reiterated that innovative devices are not included in collection for the time being, and plate valuation is expected to be repaired. In the long run, there are many board tracks, molecular diagnosis and surgical robots and other sub-tracks have great potential, innovative enterprises have technical barriers. It is recommended to pay attention to minimally invasive robot-B (2252.HK).

3) Medical services: the penetration rate of medical services is low, and there are broad prospects for related demand growth in the future. We should pay attention to the performance flexibility after the mitigation of the epidemic, and suggest to pay attention to 2273.HK, 6078.HK, 2219.HK and so on.

4) the current valuation of the CXO:CXO industry is relatively reasonable, the allocation performance and price is relatively high, and the domestic industrial chain has a global competitive advantage, benefiting from the growth of downstream demand at home and abroad, the high prosperity of the industry can be sustained. Long-term recommendation integration industry leader Wuxi Apptec (2359.HK), Pharmaron Beijing Co., Ltd.* (3759.HK), Tigermed (3347.HK).

5) Vaccine + new crown medicine: the current prevention and control situation is not relaxed, the third needle strengthening needle promotion, follow-up strengthening needle policy (such as the fourth needle, etc.) are potential incremental space, in addition, the new crown drug is also an important part of the prevention and control system. Prior to the decline of the relevant target is larger, the valuation returned to a reasonable space. It is recommended to pay attention to CANSINOBIO (6185.HK) and Junshi creature (1877.HK).