Guosen Securities has released a report stating that sectors related to medical services and consumption are trading at historically low valuations following a prolonged period of adjustment. By 2026, with improvements in supply structure, increased patient volumes, and store optimizations, a dual recovery in both fundamentals and valuations is anticipated. Additionally, AI integration is providing new momentum for leading companies. Concurrently, the global expansion of domestic innovative drugs continues to deepen, with the R&D efficiency and cost advantages of China's innovative drugs gaining international recognition. The main views of Guosen Securities are as follows:
Focus on undervalued service and consumer sectors with earnings recovery potential. The medical services and related consumer sectors have undergone a long adjustment phase, with valuations now at historically low percentiles. A fundamental improvement is expected by 2026, with attention on the following sub-sectors: 1) Medical Services: Business is gradually recovering as supply structure and consumer environments improve. With stable average spending per customer and rising patient volumes, leading companies have provided positive earnings guidance for 2026, suggesting a potential dual recovery in fundamentals and valuations. The implementation and empowerment of AI-related businesses are also beginning to provide new growth drivers for leading medical service enterprises. Companies to watch include: Aier Eye Hospital Group, Gushengtang Health, Tongce Medical, and Hygeia Healthcare. 2) Pharmacies: Since Q3 2025, the performance of the A-share pharmacy sector has shown significant marginal improvement, with same-store sales at leading companies improving quarter-by-quarter. Guidelines from nine government ministries have clarified the long-term direction of increasing industry concentration and chain rates. Adjustments to non-pharmaceutical product categories and store structure optimization are driving short to medium-term performance improvements. Companies to watch include: Yifeng Pharmacy Chain and Dashenlin Pharmaceutical. 3) Home Medical Devices: Increased penetration of new products and rising localization rates are key growth drivers for companies in the home medical device sector. Products like CGM and sleep apnea devices are experiencing rapid industry growth, with domestic leaders rapidly advancing their overseas commercialization. Competition in traditional categories like blood pressure monitors is gradually focusing on the high-end market, where domestic brands are steadily gaining market share. High domestic growth coupled with new overseas markets is contributing to sustained earnings growth for home medical device companies. Companies to watch include: Yuwell, Cofoe Medical, Sinocare, and ResMed.
The global expansion and collaboration for innovative drugs continue to deepen. Recently, CSPC Pharmaceutical Group and Innovent Biologics entered into significant cooperation agreements with AstraZeneca and Eli Lilly, respectively. The overseas expansion of domestic innovative drugs continues. Multi-project cooperation agreements based on technology platforms indicate that the R&D capabilities of China's innovative drugs are increasingly recognized by multinational pharmaceutical companies, with the efficiency and cost advantages of Chinese innovation being consistently demonstrated.
The recommended investment portfolio for February 2026 includes: A-shares: Mindray Bio-Medical, United Imaging Healthcare, WuXi AppTec, Snibe, Mehow, Amoy Diagnostics, Zhende Medical, GemPharmatech, KingMed Diagnostics, Aier Eye Hospital Group, Yuwell, Yifeng Pharmacy Chain, Dashenlin Pharmaceutical. H-shares: Akeso, Kelun-B, HUTCHMED, Keymed-B, 3SBio, Gushengtang Health, Aikang Medical.
Risk warnings include: R&D failure risk; commercialization underperformance risk; geopolitical risk; unexpected policy changes risk.