Chinese industry: the gradual release of medical reform favorable recommendation
In Medical Reform Background, the Chinese state run industries, the development characteristics and future development trends; (2) the second half of 2008, the investment strategy of Chinese medicine industry.
Medicine industry is worth a long-term bullish. The new health care reform on the pharmaceutical industry constitutes a long-term good,
Health Insurance Expansion effect is starting to show, with the population increasing health insurance coverage, medical reform in the way leveraged leveraging consumption of drugs, drugs to accelerate market expansion. The development of Chinese industry as a key state industries, has been policy support, and embodies the brand products, pricing, multi-level TCM protection means and relatively independent of drug approval system, etc., all good for the healthy development of the industry.
Industry to maintain a high boom, growing both revenue and net profit. 1-11 months in 2007, traditional Chinese medicine industry, 118.28 billion yuan in sales revenue, up 21.1%, a total profit of 13.59 billion yuan, up 52.6%; 1-2 months of this year, Chinese patent medicine industry, sales revenue 20.32 billion yuan, an increase of 25.8%, a total profit of 1.77 billion yuan, up 31.0%. Can be seen, the overall industry revenue growth trend to continue, and record high, profits continue to maintain high growth, and profits grew faster than income growth, the industry continues to maintain a high boom.
Improve the quality of company operations. In the context of increasing inflation, industry gross margin decline slowed, the average gross margin of listed companies are improving, because of their inherent proprietary products business has some pricing power and
Chinese herbal medicines Ability to smooth price fluctuations, especially in 2007, most of the brands of proprietary Chinese medicines increases the product prices, product volume and price go up there a pattern. In addition, the industry rate during the decreasing costs, improving quality of business operations.
We maintain our industry "overweight" investment rating. Pharmaceutical industry is undergoing significant environmental changes, external multi-stimulated industry to better development of the industry into the period of rapid development, our future development trend of the industry are optimistic about the overall industry growth can still continue the momentum of 2007, the main income levels above 20% net profit growth will slow, but still higher than income growth.
2008 stocks in the investment strategy of the Chinese medicine. We propose the following investment idea: to focus on high growth, low valuation of the company. Concerned about the health of high growth companies recommended margin of Medicine, S 39 and Kunming pharmaceutical. Underestimate the value of corporate proposals concern Guangzhou Pharmaceutical, medicine river, ST, etc. in the new. In the current share price level, we give S 39, ST New "buy" investment rating, to maintain Hong edge of medicine, Yunnanbaiyao and East E-Jiao "overweight" investment rating.
Investment points Medicine industry to maintain high boom. 1-11 months in 2007, traditional Chinese medicine industry, 118.28 billion yuan in sales revenue, up 21.1%, a total profit of 13.59 billion yuan, up 52.6%; 1-2 months of this year, Chinese patent medicine industry, sales revenue 20.32 billion yuan, an increase of 25.8%, a total profit of 1.77 billion yuan, up 31.0%. Can be seen, the overall industry revenue growth trend to continue, and record high, profits continue to maintain high growth, and profits grew faster than income growth, the industry continues to maintain a high boom.
Improve the quality of company operations. In 2007, in the context of increasing inflation, industry gross margin decline slowed, the average gross margin of listed companies are improving, because of its internal proprietary products business has some pricing power and price fluctuations on the Chinese herbal medicines smoothing capability, especially in 2007, most of the brands of proprietary Chinese medicines increases the product prices, product volume and price go up there a pattern. In addition, the industry rate during the decreasing costs, improve the quality of business operations.
2008 development trend of the Chinese medicine industry is optimistic. First, new medical reform in the context of such external good, the overall industry growth of economies of scale can still continue the momentum of 2007, the main income will remain at 20% level, but net profit growth will slow, but still be higher than income growth. Second, the medical reform policies and purified the industry competitive environment, speed up the survival of the fittest, the company's differentiation is inevitable, the industry in quality can be improved.
We maintain the traditional Chinese medicine industry, "overweight" rating. The reasons are: (1) With the expansion of health insurance coverage, medical reform in the way leveraged leveraging consumption of drugs, drug market is accelerating expansion, the government has increased investment in health care began to release pent-up demand for health care.
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