The traditional Chinese medicine sector will usher in a double recovery of valuation and performance, and many pharmaceutical companies will hand over satisfactory "report cards"

【Pharmaceutical Network Market Analysis】 "China has been committed to promoting the inheritance and innovation of traditional Chinese medicine, and under the guidance of a series of industry policies, the development of traditional Chinese medicine industry has been improving
for a long time.
" Some insiders said that under the background of intensive increase in favorable policies of traditional Chinese medicine and the improvement of business operations, the traditional Chinese medicine sector will usher in a double recovery
of valuation and performance.
From the third quarter performance report of this year, as of October 31, 74 A-share listed Chinese medicine companies announced the "report card" of the third quarter, of which 29 companies achieved double growth in revenue and net profit attributable to the parent, accounting for 39.
19%.

For example, in the first three quarters of 2022, Baiyun Mountain's total operating income increased by 2.
37% year-on-year to 54.
806 billion yuan, and the net profit attributable to the parent increased by 4.
91% year-on-year to 3.
474 billion yuan
.
In the third quarter, the company's total operating income increased by 1% year-on-year to 17.
585 billion yuan, and the net profit attributable to the parent increased by 9.
27% year-on-year to 884 million yuan
.
In the first three quarters of 2022, CR Sanjiu achieved a year-on-year increase of 7.
53% in operating income of 12.
11 billion yuan, and a year-on-year increase of 11.
17% in net profit attributable to the parent to 1.
952 billion yuan
.
In the third quarter, the company achieved operating income of 3.
71 billion yuan, an adjusted year-on-year increase of 9.
18% over the same period of the previous year, and a net profit attributable to the parent of 519 million yuan, a year-on-year increase of 36.
52%.

In the third quarter of 2022, Buchang Pharmaceutical achieved operating income of 4.
207 billion yuan, a year-on-year increase of 5.
40%; The net profit attributable to the shareholders of the listed company was 448 million yuan, a year-on-year increase of 36.
78%.

Among them, for the performance, China Resources Sanjiu said that overall, the growth rate of revenue and net profit in the first three quarters was basically in line with expectations, and the growth rate of performance in the first half of the year was improved, mainly driven by the CHC business
.
Brand OTC business, professional brand business, and big health business all achieved double-digit growth, and the Kangslow business was slightly lower than expected
.
It said that the CHC business has maintained a gradual upward trend in the past few years, and the proportion of CHC business revenue has continued to increase, accounting for more than 60% of
the overall revenue in the first three quarters.
In addition, analysts pointed out that from the perspective of subdivisions, the performance of enterprises related to traditional Chinese medicine formula granules is outstanding
.
For example, in addition to the above-mentioned China Resources Sanjiu, Yiling Pharmaceutical also achieved revenue of 2.
380 billion yuan in the third quarter, a year-on-year increase of 7.
41%; The net profit attributable to the parent was 366 million yuan, a year-on-year increase of 40.
92%.

For the development of traditional Chinese medicine, the industry said that in terms of policy, traditional Chinese medicine has risen to the national strategic level, and a number of proprietary Chinese medicines are expected to be transferred to the medical insurance catalogue after negotiations at the end of the year, and the volume
is expected to be rapidly increased after inclusion.
In the future, with the further improvement of the high-quality development policy and system of traditional Chinese medicine, the unique advantages of traditional Chinese medicine in the construction of a healthy China will be further developed
.
In addition, Xiangcai Securities pointed out that in the medium and long term, "policy + rigidity of pharmaceutical consumption + stable performance + valuation advantage" jointly build investment opportunities
in the traditional Chinese medicine industry.
First of all, the policy's support for the Chinese medicine industry covers the entire industry chain of Chinese medicine, involving upstream Chinese herbal medicine planting, Chinese medicine service system, talent construction, inheritance and innovation, open development, medical insurance payment, review and approval, etc.
, and the Chinese medicine industry ushered in a period of policy dividends; Secondly, under the background of centralized procurement, the expansion of OTC terminals can help Chinese medicine enterprises smooth the impact of price reduction brought by centralized procurement at the hospital end, and consumer Chinese medicines are a safe haven
for centralized procurement policies.
Great Wall Securities pointed out that from the supply side, the improvement of grassroots Chinese medicine supporting facilities and service capabilities have been significantly improved; From the demand side, the chronic disease market ushered in market expansion under the background of accelerated aging, and with the trend of consumption upgrading, the consumer market gradually picked up; From the sales side, benefiting from the expansion of centralized procurement and the adjustment of basic drugs, the exclusive varieties of basic drugs are expected to increase in volume.
.
.
Optimistic about the long-term investment value of traditional Chinese medicine, valuation is expected to recover
in the fourth quarter.
Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice
to anyone.