The decline of chain pharmacies is not necessarily a change in fundamentals, but may also have a certain correlation with the refinancing securities business. On July 10, the China Securities Regulatory Commission (CSRC) approved China Securities Financial Corporation to suspend its refinancing business in accordance with the law, which will be implemented from July 11, 2024. Coincidentally, according to Oriental Wealth data, the closing price of the pharmaceutical business sector (BK1042) index just bottomed out on July 10, and then this round of unilateral decline from May 15 began to stop, and since July 10, as of yesterday August 8, the sector has risen by about 6%. At the same time, we also found that since July 10, the decline of more than 2% in the pharmaceutical business sector has never disappeared, and between June 3 ~ July 10, in just over 20 trading days, the negative line of the plate has fallen by more than 2% 7 times, with an average of a sharp fall every three or four days.
Behind this extreme decline, what role does the refinancing business play?
Let's take the top companies in chain pharmacies, such as Yifeng Pharmacy, Dashenlin, Laobaimin, and Yixintang, as examples, to take a look at the changes in the company's refinancing bond balance at these three points in time, such as May 15, July 10, and August 8.
From the figure, we find that on May 15, the full-day turnover of several companies was only more than 100 million yuan, but the balance of refinancing bonds was more than 10 million yuan, especially Yifeng Pharmacy, where the balance of refinancing bonds was as high as more than 45 million yuan. Since the refinancing securities business is to short stocks, and the impact of the refinancing securities business on the stock price is almost decisive at this time, it is difficult for ordinary investors to resist such a large number of selling orders, so they can only follow the passive stop loss, thus forming a herd effect, and the rapid decline of stock prices makes people feel bottomless, in just two months, many companies have fallen by 30%, 40%, or even more than 50%.
So has the investment logic of chain pharmacies changed? In the article on July 2, we have made it very clear that "the online price comparison policy mainly affects small pharmacies, and has less impact on large chain pharmacies, and even more conducive to the expansion of large chain pharmacies in the future", but under the shorting of the refinancing securities business and the following trend of market sentiment, the investment logic of chain pharmacies has not changed, and there is no problem with the fundamentals, but it has ushered in a round of plunge.
The essence of stock market investment is a kind of cognitive difference, because only when others abandon the chips, we can buy chips, which is the cognitive difference that promotes the buying and selling transaction.
From the chart, we can also find that after July 10, with the sharp decline in the balance of refinancing bonds, the index of the pharmaceutical business sector bottomed out, and the stock prices of related companies gradually stopped falling and stabilized. By August 8, the balance of refinancing securities has been less than 4 million yuan, with the gradual clearing of the balance of refinancing bonds, due to the misinterpretation of the policy, as well as the deliberate promotion of shorting the refinancing securities business, the farce of market sentiment and funds passively following the trend will also be calm, and the market will gradually return to rationality in the future, ushering in the return of valuation. At the same time, due to the high base of performance caused by the opening of the new crown epidemic at the end of 2022 and the beginning of 2023, the performance growth rate in the fourth quarter of 2023 and the first quarter of 2024 has generally declined. However, it is precisely because of the relatively low base of performance growth in the fourth quarter of 2023 that the performance growth rate in 2024 will also exceed expectations.
Since stock prices tend to reflect a company's performance in advance, there is still a chance that the overly wrongly killed pharmacy chains will still have a Davis double-hit before then.
Lv Changshun (Cairns) Certificate number: A0150619070003. [The above content only represents personal views and does not constitute a basis for trading, the stock market is risky, and investment needs to be cautious]