交银国际每日晨报-20250619

Core Insights - The prescription drug sector in Hong Kong has shown strong performance since the beginning of the year, driven by improved earnings expectations and significant business development (BD) transactions [1] - The average forward P/E ratio for the prescription drug sector is slightly above the past five-year average, indicating that while the apparent valuation is high, the core business valuations remain attractive when excluding BD collaborations [1] - The report recommends focusing on specific companies such as Xiansheng Pharmaceutical, Hansoh, China National Pharmaceutical, and Tonghua Dongbao, with target price adjustments made for Hansoh and China National Pharmaceutical [1] Summary by Sections Industry Overview - The prescription drug sector has rebounded due to innovation and improved performance expectations, with a consensus EPS forecast for 2025 being revised up by approximately 2% since the beginning of the year [1] - Companies with faster innovation cycles and positive fundamentals have seen larger upward revisions in their EPS forecasts, leading to stronger stock performance [1] Valuation Analysis - The current average forward P/E ratio for the sector is slightly above the historical average by 0.4 standard deviations, translating to about 2 times PEG when excluding certain companies like Heng Rui [1] - Despite the high apparent valuation, the core business valuations remain attractive, suggesting potential for further valuation upgrades driven by sustained long-term growth [1] Stock Recommendations - The report highlights Xiansheng Pharmaceutical as a key recommendation, with additional focus on Hansoh, China National Pharmaceutical, and Tonghua Dongbao, which are expected to benefit from overseas expansion or performance catalysts [1] - Target prices for Hansoh and China National Pharmaceutical have been raised, while the rating for Kelun Pharmaceutical has been downgraded to neutral, maintaining neutral ratings for Heng Rui and Shiyao [1]