CMB International released a research report highlighting a preference for stable investment strategies and opportunities in undervalued stocks. GUSHENGTANG (02273) announced a HK$300 million share buyback plan, bringing its total repurchases this year to HK$350 million. The expected return from buybacks (excluding new repurchases) and dividends could reach 7%. The firm recommends buying 3SBIO (01530), GUSHENGTANG, GIANT BIOGENE (02367), WUXI XDC (02268), INNOVENT BIO (01801), and SINO BIOPHARM (01177).
Key insights from CMB International include: - The MSCI China Healthcare Index has risen 59.5% year-to-date, outperforming the MSCI China Index by 24.0%. - Recent corrections in the healthcare sector (the MSCI China Healthcare Index fell 10% since October) present attractive opportunities in undervalued stocks. - A recovery in capital market financing and increased overseas licensing deals for innovative drugs have revitalized domestic R&D demand. - With potential U.S. rate cuts, the CXO sector may see earnings recovery in the second half of 2025. - Clinical progress of licensed innovative drug pipelines overseas will be a key catalyst for the sector, as commercialization success drives milestone payments and revenue sharing.
3SBIO remains a top pick: - Global partner Pfizer has disclosed two Phase 3 trial plans for 707, targeting first-line NSCLC and colorectal cancer. - Updated Phase 2 data for PD-1/VEGF combination therapy in NSCLC at the 2025 SITC conference reaffirmed best-in-class potential in efficacy (ORR) and safety.
Market attention shifts away from医保谈判 (NRDL negotiations) and the 11th centralized procurement: - The 2025 NRDL negotiations concluded in early November, with 127 out-of-list drugs participating. Results are expected in early December. Notable candidates include Sac-TMT (Kelun-Botech), INNOVENT BIO’s KRASG12C and ROS1 inhibitors, and恒瑞医药’s IL-17 and HER2 ADC. - The 11th centralized procurement, completed in late October, included 55 drugs. New rules emphasize stable supply, quality assurance, and fair competition, with "anchor pricing" and revival mechanisms. Price cuts were not disclosed, but bid success rates remained high, indicating rational competition. - While仿制药 (generic drugs) will sustain low margins, the focus on overseas expansion has reduced market sensitivity to domestic pricing policies. However, local performance remains a critical earnings variable.