Performance expectations and allocation needs pharmaceutical stocks are not outrageous

Once, the intervention in pharmaceutical stocks was mainly based on the passive allocation of funds in a weak market environment; now, pharmaceutical stocks frequently show cases of "white horse turning into black horse", especially leading pharmaceutical stocks Zhou Rui, chief analyst of the pharmaceutical industry of CIC securities, believes that the market highly recognizes the medium and long-term prospects of the pharmaceutical industry At present, the valuation of pharmaceutical stocks has not reached a particularly outrageous level Li Shanshan, chief analyst of China Merchants Securities pharmaceutical industry, also pointed out that the recovery of profit growth and strategic allocation demand will continue to push pharmaceutical stocks upward in the medium term Two factors establish the medium-term upward tone of pharmaceutical stocks China Securities News: in 2013, the pharmaceutical sector went out of a trend upward market, can it continue in the future? Zhou Rui: the sustained and stable growth characteristics of the pharmaceutical industry and the clear growth trend in the next 5-10 years make the pharmaceutical sector continuously recognized by the market In the future, the sustainability of the market of pharmaceutical sector mainly depends on two factors: first, whether the performance of pharmaceutical sector in the medium term and the second half of the year can exceed the market expectation; second, whether the cyclical sector can turn over, and whether the market will usher in style change Overall, as a safe haven option in weak markets, pharmaceutical stocks are still worthy of allocation Li Shanshan: at present, the overall valuation of the pharmaceutical sector is about 29 times (still at a relatively low historical level), but the valuation premium rate of the relative market has reached a historical high level of 196% As the market has different opinions on the future policies, it is inevitable that the short-term pharmaceutical sector will have some shocks In the medium term, the recovery of profit growth and strategic allocation demand will continue to push pharmaceutical stocks upward On the one hand, the current macro-economy is in the transition period, and improving the proportion of consumption is the direction of economic development in the future, so the consumption sector is the key to the allocation of large-scale assets; on the other hand, the consumption sector with large capital allocation, such as the liquor industry, has encountered short-term development problems, which to some extent contributed to the more centralized allocation of funds to pharmaceutical stocks Medium term performance stable rise of pharmaceutical stocks tends to stabilize China Securities Journal: how to look at the overall performance of the pharmaceutical sector in 2013? Will the China Daily give birth to a new wave of performance speculation in pharmaceutical stocks? Zhou Rui: in the middle of 2013, the performance disclosure of pharmaceutical stocks just started Among the more than 60 pharmaceutical listed companies that we focus on tracking, the profit growth of more than 30% is expected to reach 40%, accounting for a relatively high proportion At present, pharmaceutical stocks are gradually reflecting the expectation of China news, among which the stocks whose performance has been increased in advance will undoubtedly be strong However, for investors, more attention should be paid to the sustainability of performance growth The performance expectations of individual pharmaceutical stocks in the third quarter, the fourth quarter and even 2014 will affect their current performance It is not necessarily accurate to judge the mid-term performance of 2013 only Li Shanshan: from the pre disclosure of China Daily, the performance of pharmaceutical stocks in mid-2013 basically met the expectations, and the performance remained stable We believe that the performance of most companies in China Daily will still meet the expectations, and the performance expectations of most companies have been gradually fulfilled, and the enthusiasm for performance speculation is expected to be moderate, but the stocks that exceed the expectations still deserve special attention Valuations are not "too high" China Securities Daily: at present, the valuation premium rate of pharmaceutical stocks relative to the market has climbed to a record high again Is there a bubble? Zhou Rui: the valuation premium rate of pharmaceutical stocks relative to Shanghai and Shenzhen 300 once reached 200%, which is at a historical high level However, the absolute valuation of PE in 2013 is still below 30 times, which means that the valuation of pharmaceutical stocks is not so far off the mark From the perspective of PEG, most of the mainstream pharmaceutical stocks PE and its growth are relatively matched, and the expected support strength of future pharmaceutical stocks performance growth is relatively more important In fact, there are still undervalued stocks in the pharmaceutical sector, which shows that most investors are rational Li Shanshan: Although the current valuation premium rate of the pharmaceutical sector relative to the market has reached a historical high level of 196%, the effective support for the overall valuation of the pharmaceutical shares still exists, and in the medium and long term, the pharmaceutical shares still have the opportunity to rise in a trend The deterministic opportunity lies in the fine stock selection of China Securities Journal: what path will the trend of pharmaceutical stocks follow in the whole year? What are the triggers for the adjustment of pharmaceutical stocks? Where are the investment opportunities? Zhou Rui: in the whole year, it should be a high probability event for pharmaceutical stocks to obtain absolute returns, but it is also not ruled out that the plate fluctuates due to the allocation of market funds Rumors such as price reduction and fee control did not reverse the medium-term upward trend of pharmaceutical stocks, which shows that the market highly recognizes the medium and long-term prospects of the pharmaceutical industry and is willing to trade time for space In the future, the most likely trigger for the adjustment of pharmaceutical stocks is the transformation of market style In the medium term, it needs a long-term perspective to invest in pharmaceutical stocks The first choice is the deterministic pharmaceutical stocks with sustained growth in performance Even if there is a short-term adjustment, the medium-term return will be quite good Li Shanshan: throughout the year, the market of pharmaceutical stocks is more characterized by differentiation From July 2009 to November 2010, the 17 month long pharmaceutical bull market was a "chicken and dog rising" market, making money that the fundamentals of the pharmaceutical industry exceeded expectations; and the market of the pharmaceutical stocks was more derived from refined stock selection, making money with super stock selection ability In the second half of the year, the investment opportunities may be more in three categories: first, the leading stocks in the sectors that are relatively less affected by the policies, including the sectors of traditional Chinese medicine, medical services and medical devices; second, the relevant growth stocks that benefit from the policy dividends, such as the basic drug system; third, some varieties with long-term competitiveness, such as the pharmaceutical stocks with rich R & D reserves Zhou Rui: "the valuation premium rate of pharmaceutical stocks relative to Shanghai and Shenzhen 300 once reached 200%, which is at a historical high level, but the absolute valuation in 2013 is still under 30 times of dynamic PE, which means that the valuation of the pharmaceutical sector has not been extraordinary." -- Li Shanshan, the third largest pharmaceutical analyst in 2012 of Jinniu, chief analyst of China investment securities pharmaceutical industry: "in the medium term, the recovery of profit growth and strategic allocation demand will continue to drive pharmaceutical stocks upward." -- 2012 Jinniu analyst medical industry Finalist Award, chief analyst of China Merchants Securities pharmaceutical industry