CMB International released a report stating that the MSCI China Healthcare Index has fallen 26.5% since the beginning of the year, underperforming the MSCI China Index by 33.7%. The dynamic price-earnings ratio of the industry index is currently 24 times, lower than the historical average of 12 years. The bank expects the policy on medical equipment upgrades to be implemented soon, which will effectively stimulate the related demand. The State Council's key task in deepening the reform of the medical and health system by 2024 is to formulate guiding documents on supporting the development of innovative drugs throughout the whole chain. The bank believes that with the implementation of supportive policies and the normalization of industry supervision, the recovery of performance will bring about a valuation repair of the industry.

CMB International continues to be bullish on new medical consumption. The sales performance of CanSino Biologics (02367.HK) continues to be impressive. During the 618 period this year, its online GMV increased by more than 60% YoY for the KangfuMei line and more than 100% YoY for the KeliJin line. In addition, Innovent Biologics (01801.HK) announced the results of phase three clinical trials for Marzudotide to treat obesity, achieving a 14.84% weight loss after 48 weeks of treatment, while significantly reducing LDL-C, serum uric acid, and ALT, which has the potential to improve fatty liver. The bank expects the drug to be approved in the first half of next year, becoming the first domestically produced dual-target GLP-1 obesity drug with the potential for rapid growth. In addition, the bank points out that retail channel regulation has become stricter because after retail pharmacies were included in the overall medical insurance, tighter regulation is inevitable.

CMB International continues to be bullish on innovative drug and medical device leaders as well as high-growth healthcare consumer stocks. They are optimistic about the rebound in the healthcare industry, mainly because the policy on medical equipment upgrades will effectively stimulate purchasing demand and the innovative drug and medical device support policies are expected to be implemented. Going overseas provides growth momentum, and the overseas market for innovative medical devices is growing rapidly, with continuing prospects for innovative drug overseas licensing transactions. Long-term investment opportunities include GLP-1, ADC, and other areas. CMB International continues to be bullish on Mindray Medical (300760.SZ), United Imaging (688271.SS), Beigene (06160.HK), Jacobson Pharma (02273.HK), Kangji Medical (06990.HK), CanSino Biologics, and Innovent Biologics.