Author丨Ji Yuanyuan
Edit丨Wuyinggang
Picture Source丨TuChong
As A shares continue to adjust, the stock price of the pharmaceutical sector continued to decline. In order to boost market confidence, A-share biopharmaceutical companies have a repurchase wave.
, especially after Hengrui Medicine planned to repurchase shares for 600 million to 1.2 billion yuan in March this year, , the pharmaceutical sector has frequently repurchased. In the first quarter of 2022 alone, more than 30 pharmaceutical companies announced the stock repurchase plans and repurchase progress.
According to Nancai Financial terminal data, since 2022, as of October 18 this year, the Shanghai Composite Index, Shenzhen Component Index and ChiNext Index fell 15.35%, 24.7%, and 26.36% respectively. The historical percentage points of the price-to-earnings ratio in the past decade are 26.46%, 47.24% and 30.02%, respectively, and the valuation advantages of A shares are becoming increasingly prominent.
At the same time, since this year, as of October 18, a total of 124 listed companies have implemented repurchases in the first-level pharmaceutical and cosmetic care of Shenwan, A-share Shenwan, a total of 124 listed companies have implemented repurchases, including Mindray Medical , Yunnan Baiyao , Health Yuan , Kailaiying , Jiuzhoutong , Tiger Pharmaceutical , BGI , Shengxiang Bio , Lepu Medical , Watson Bio and other subdivided leading companies. involves a total of 486 million shares, with a total amount of 12.1 billion yuan.
Regarding the reasons why A-share pharmaceutical and medical companies have set off a wave of repurchases, some analysts pointed out to 21st Century Business Herald that on the one hand, listed companies taking out "real money" actions can demonstrate investors' confidence in the company's operating conditions and future development prospects, which will help boost stock price performance, and the inflow of repurchases will also help improve the market capital market; on the other hand, repurchasing when the stock price continues to fall or the stock price is low is conducive to controlling the repurchasing costs, so as to facilitate the current severe and complex competitive environment and industrial changes.
"From the overall environment, due to the impact of external international environment and energy prices, the inflation of the entire economy, and other unfavorable factors such as the repeated changes in the new crown epidemic, market uncertainty will intensify. When the industry is experiencing fluctuations, many pharmaceutical companies have started a self-rescue model, releasing good news of "good operating conditions", which is also considered to be one of the ways of self-rescue. The company actively makes good use of repurchase tools, which can convey to investors the company's management's confidence in the company's value and its development in my country's capital market." The analyst said.
Leading companies intensively repurchase
From the perspective of repurchase strength, Hengrui Medicine and Mindray Medical are the main companies that have repurchased largely this year.
In the first half of this year, the leading medical device company Mindray Medical issued an announcement that it has repurchased 3.2499 million shares of the company through a stock repurchase special securities account through centralized bidding transactions, accounting for 0.2673% of the company's total share capital. The highest transaction price is 322.56 yuan/share, the lowest transaction price is 291.44 yuan/share, the average price is 307.595 yuan/share, and the total amount paid is 999,944,451.22 yuan (including transaction fee ). At this point, Mindray Medical's 1 billion yuan share repurchase plan has been implemented.
Shortly afterwards, Hengrui Medicine announced that it plans to repurchase shares for 600 million to 1.2 billion yuan, and the source of the repurchase of shares is the company's own funds; the company's shares will be repurchased from the secondary market through centralized bidding transactions, and the repurchased shares will be used for employee stock ownership plans or equity incentives. This is the first large-scale repurchase in more than 20 years since Hengrui Medical went public.
In view of the reasons for this series of measures, some industry insiders believe that from the perspective of market capital, this seems to reveal that companies are dissatisfied with the current situation of their stock price being too low, which also indicates that some companies have good revenue and low financial pressure; share repurchase is a means for enterprises to effectively dispatch funds, and companies will use stock repurchase as a means of treasury or employee incentive when they have excess funds on hand.
"Sell relevant shares when the stock price rises, when the company lacks funds, or after the incentive option is recovered, so as to achieve the purpose of effectively raising funds and scheduling financial revenue and expenditure. In general, this means that the company has confidence in growth and believes that its stock price has approached a trough or rebound window."
But in fact, this is also a strategic adjustment made by the company due to the increasingly complex internal and external environment. Taking Hengrui Medicine as an example, affected by centralized procurement in the past two years, generic drug revenue has plummeted, a number of innovative drugs have implemented new medical insurance negotiation prices, and the domestic epidemic has impacted product sales, resulting in a significant decline in the company's revenue. The impact of profit also includes the continuous increase in the prices of major raw and auxiliary materials and energy, logistics costs, and the continued steady increase in R&D investment. Therefore, internal and external troubles have led to the decline in the stock price of Hengrui Medicine. The decline has to boost the confidence of the capital market.
In order to optimize the details of repurchase, Shanghai Stock Exchange and Shenzhen Stock Exchange have recently revised the "Guidelines for Self-Discipline Supervision of Shanghai Stock Exchange Listed Companies No. 7 - Repurchase Shares", "Guidelines for Self-Discipline Supervision of Shenzhen Stock Exchange Listed Companies No. 9 - Repurchase Shares", as well as "Guidelines for Self-Discipline Supervision of Shanghai Stock Exchange Listed Companies No. 8 - Share Change Management", and "Guidelines for Self-Discipline Supervision of Shenzhen Stock Exchange Listed Companies No. 10 No. - Share Change Management. According to the revision content, the details of repurchase of listed companies are clarified in four aspects.
First, optimize the repurchase conditions of listed companies. will one of the repurchase trigger conditions necessary to maintain the company's value and shareholders' interests, from "the company's stock closing price decline reached 30% in 20 consecutive trading days" to "the company's stock closing price decline reached 25% in 20 consecutive trading days".
Second is to relax the repurchase restrictions on newly listed companies. will adjust the requirements for "listing for 1 year" in the implementation conditions for repurchasing shares to "listing for 6 months". If a new listed company intends to implement repurchases necessary to safeguard the company's value and shareholders' interests and repurchasing shares for capital reduction, it will still not be subject to the aforementioned listing period.
Third is to improve the window period for repurchasing shares and increase holdings. will shorten the window period for repurchasing shares through centralized bidding from the first 10 trading days of quarterly reports, performance forecasts and performance report announcements to 5 Within one trading day, and adjust the window period for bidding and reducing holdings for repurchasing shares accordingly to keep the two consistent. The window period for directors, supervisors and senior management to buy and sell shares will be shortened from within 30 days before the announcement of the annual report and semi-annual report, and within 10 days before the announcement of the quarterly report, performance forecast and performance report to within 15 days before the disclosure of the relevant announcement.
Fourth, reasonably define the share issuance behavior. further clarifies the share issuance behavior that cannot be implemented during the repurchase period stipulated by the current rules, and further clarifies that the listed company will obtain approval or registration and initiate the Share issuance behavior from the date of issuance to the date when the new shares are completed.
Some capital market research experts have analyzed that this revision is timely. The registration system reform accelerates the optimization of the market ecology. The flexible use of market-oriented tools such as repurchase and increase in listed companies' shareholders and directors, supervisors and senior management reflects to a certain extent that the market structure is transforming from seller market to the investment and financing balance market.
When will the pharmaceutical market usher in a turning point?
html While l2 is boosting the capital market through repurchase, it has to be seen that the current situation of biopharmaceuticals in the capital market is difficult. In the past two years, due to multiple uncertainties, the number of investment and financing projects of biopharmaceutical companies has slowed down compared with the past few years, investors have become more cautious, and the popularity of biopharmaceutical IPOs has cooled down.As Industrial Securities analysis pointed out, since the second half of 2021, pharmaceuticals have experienced continuous significant adjustments, reaching the lowest holdings of in the past ten years, and the current policy bottom, The characteristics of valuation bottom and position bottom are significant. At its root cause, on the one hand, the changes in the macro environment in the past two years have led to the intensification of capital market fluctuations, and the rotation of sectors and the no longer at the forefront of biopharmaceutical companies is also a direct factor in the decline in total financing; on the other hand, more attention is needed to pay more attention to the phenomenon of a sharp correction in the valuation of biopharmaceutical companies in the capital market. The decline in valuation is to a considerable extent due to the reshaping of the valuation system of biopharmaceutical companies by US stocks, and has not been repaired enough so far, which has in turn led to a decrease in the total financing amount of biopharmaceutical companies.
also had an investment director of medical companies that analyzed that since the beginning of this year, the areas in the biopharmaceutical industry that are mainly based on high valuation high growth have been affected by many external factors, and the valuation logic has changed. The current stock prices of some companies have not fully reflected the company's long-term investment value and good asset quality, resulting in some shareholders that it is necessary for listed companies to stabilize their stock prices through repurchases or send a signal that their stock prices are undervalued to the market.
This is also because biomedicine is a risky industry from its own nature. As a biotechnology company, when developing related products, everything must be spoken by clinical data. Even if the third phase clinical product that has experienced a life-threatening life is approved for market launch, the commercialization of "star" products may still fail in the end, and the market risks behind it are difficult to predict. Therefore, this also requires investors to have a keen vision and better control of market risks.
So in the face of market uncertainty, valuation downward, and capital enthusiasm no longer, how can biomedicine win capital trust again?
In this regard, a medical consulting analyst who did not want to be named said in an interview with a reporter from 21st Century Business Herald that it can be seen from the data that compared with previous years, the pharmaceutical market has reached a relatively deep "low point". This is also because since the outbreak of the new crown epidemic, a large amount of capital has poured into the medical track and the valuation is relatively inflated. Considering the investment costs, a large number of institutions have begun to increasingly favor early-stage projects or Pre-IPO projects. Starting from mid-2021, the secondary market bubble burst, the value system was restructured, and projects and investors became more and more rational. By 2022, new drug financing will continue to remain on the downward trend.
However, despite this, judging from the financing events, quantity and financing amount of global and Chinese medical and health industries in the first quarter of 2022, the medical and health industry is still a track that capital focuses on. In particular, vaccine and drug research and development companies related to new crown , as well as CRO companies, will be favored by capital.
"From the overall environment, due to the conflicts in external international geopolitical , the impact of energy prices, the inflation of the entire economy, and other unfavorable factors such as the repeated changes in the new crown epidemic, market uncertainty will intensify, and investors will become more rational, which will accelerate the avoidance of high-risk, long-term new drug investment, and the financing scale should also be lower than in 2021."
The consulting analyst believes that the funds attracted by innovative companies cannot tell stories and concepts like before, and companies must conduct more stringent self-examination and iteration.
examines whether the company's technological innovation is internationally competitive, and does it have sufficient differentiated advantages compared with its competitors? Can the advantages of
products be converted into commercial value?
What is the execution and efficient operation ability of the team?
Is the financially healthy? How to increase revenue and reduce expenditure to support the subsequent 18 to 24 months of financing difficulties?
all these issues need attention.
In other words, only by managing cash flow , operating efficiently, and doing what you say can you attract investment attention and boost confidence in the capital market.
"We believe that the participants in the life sciences industry, whether they are investors or enterprises, still have enough confidence in the future of the industry and are currently only waiting for valuation and market recovery. It should be pointed out in particular that the capital market's investment in the biopharmaceutical industry will recover in the future, but the sub-sectors of attention will undergo significant changes." The consulting analyst emphasized.
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Editor Liuxiang
