Core Viewpoint - The Hang Seng Healthcare Index fell by 1.4% this week, underperforming the market, with internet medicine, CXO, and traditional Chinese medicine sectors showing better performance [1] Group 1: Market Trends - Since September, the proportion of domestic holdings through the Hong Kong Stock Connect has remained stable, while foreign holdings have slightly decreased since mid-year [1] - Both domestic and foreign investors continue to increase their positions in innovative pharmaceutical companies, indicating a consistent long-term strategy [1] Group 2: Investment Recommendations - The report suggests focusing on companies with significant data releases at the upcoming ESMO conference in mid to late October, specifically mentioning Kangfang Biotech (09926), Kelun-Biotech (06990), and Rongchang Biotech (09995) [1] - The importance of timing and stock selection has increased following a broad rise in the innovative drug sector, with recommendations to gradually build positions during market corrections [1] Group 3: Sector Focus - For the innovative drug sector, the report highlights companies such as 3SBio (01530) and Eucure Biopharma-B (06996) as having rich short-term catalysts and undervalued core products, while companies like Ascletis Pharma (02096), Hutchison China MediTech (00013), and Legend Biotech are noted as significantly undervalued with clear long-term growth logic [1] - In the CXO sector, the report points to leading companies benefiting from high downstream demand and marginal recovery in financing, specifically mentioning WuXi AppTec (02268) [1]

Core Viewpoint - The Hang Seng Healthcare Index declined by 1.4% this week, underperforming the market, with internet medicine, CXO, and traditional Chinese medicine sectors showing better performance [1] Group 1: Market Trends - Since September, the proportion of domestic holdings through the Hong Kong Stock Connect has remained stable, while foreign holdings have slightly decreased since mid-year [1] - Both domestic and foreign investors continue to increase their positions in innovative pharmaceutical companies, indicating a consistent long-term strategy [1] Group 2: Investment Opportunities - Domestic investors are focusing on rebound opportunities, while foreign investors are increasing positions in innovative drug targets with high long-term potential and current cost-effectiveness [1] - The innovative drug guarantee model is gradually taking shape, which is expected to alleviate challenges such as hospital access and reimbursement difficulties for companies [1] Group 3: Upcoming Events - The ESMO conference will be held in mid to late October, and the report suggests focusing on companies like CanSino Biologics (09926), Kelun-Biotech (06990), and Rongchang Biologics (09995) that are expected to release significant data [1] Group 4: Stock Recommendations - The importance of timing and stock selection has increased after a broad rise in the innovative drug sector, with recommendations to gradually build positions during sector pullbacks [1] - Specific recommendations include: 1. Innovative drugs: 3SBio (01530), Eucure Biopharma-B (06996) with rich short-term catalysts and undervalued long-term growth logic [1] 2. CXO: Leaders in high-demand segments benefiting from improved financing conditions, such as WuXi AppTec (02268) [1]

Core Insights - The report highlights the acceleration of adjustments in medical insurance and commercial insurance directories, suggesting a strategic approach to invest in undervalued quality stocks during market corrections [1][2] - The innovation drug sector is expected to benefit from a gradually forming insurance guarantee model, which may alleviate challenges related to hospital admissions and reimbursement payments [2] Market Review - The Hang Seng Healthcare Index fell by 1.4% this week, underperforming the broader market, while sectors such as internet medicine, CXO, and traditional Chinese medicine showed relatively better performance [1] - Domestic institutional investors maintained stable holdings through the Hong Kong Stock Connect, while foreign investors slightly reduced their positions since mid-year, although both continue to increase their investments in innovative pharmaceutical companies [1] Investment Recommendations - Focus on companies with significant data releases at the upcoming ESMO conference, such as Kangfang Biologics, Kelun-Biotech, and Rongchang Biologics [2] - Suggested investment strategies include gradually positioning in the innovative drug sector during market pullbacks, with specific recommendations for: 1) Innovative drugs: Companies like 3SBio and Eucure Biopharma have rich short-term catalysts and their valuations do not yet reflect the core value of major products [2] 2) CXO: Leaders in this segment are expected to benefit from high downstream demand and improving financing conditions, such as WuXi AppTec [2]