Core Viewpoint - The investment logic of "mother holding child" is gaining attention among fund managers as they seek undervalued stocks in the Hong Kong market, particularly in the pharmaceutical sector [1][3]. Group 1: Market Trends - Following a significant surge in the stock of Boan Biotechnology, a subsidiary of Green Leaf Pharmaceutical, which rose by 66%, another subsidiary, HeartTech Medical, saw a 47% increase, indicating a trend of "smoking stocks" in the Hong Kong pharmaceutical sector [2][3]. - The influx of new capital into the Hong Kong market is evident as public funds are shifting their focus from U.S. medical device stocks to A-share and Hong Kong pharmaceutical assets [2][5]. Group 2: Fund Manager Strategies - Fund managers are increasingly adopting a strategy of directly holding shares in parent companies rather than their subsidiaries, reflecting a preference for companies with stronger business fundamentals and competitive advantages [3][4]. - A notable shift in a QDII fund's portfolio was observed, where the allocation to A-shares and Hong Kong stocks increased significantly, indicating a strategic pivot away from U.S. stocks [6]. Group 3: Industry Performance - HeartTech Medical reported a total revenue of 472 million yuan, a year-on-year increase of 44.4%, and a net profit of 246 million yuan, up 62.22%, showcasing strong performance in the sector [4]. - The pharmaceutical sector is expected to show relative gains by 2025, driven by new industry trends and a recovery from historically low valuation levels [8][9]. Group 4: Policy and Innovation - Recent favorable policies for the pharmaceutical industry, including support for drug and medical device innovation, are expected to enhance the growth prospects for innovative drug companies [9]. - The increasing global presence of Chinese innovative drug companies is highlighted by their significant contributions to international academic conferences, indicating a robust growth trajectory [9].