Do not fear the market's "black swan" counter-trend rise, HEC CJ PHARM (01558) entry price value accelerated release.

J PHARM (01558) is one of the stocks that remain unaffected by external factors and show an upward trend in the market despite the Biosecure Act (H.R. 8333) causing volatility in the Hong Kong stock market's biopharmaceutical sector on September 10. According to the quarterly review results released by Hang Seng Index Company on August 16, HEC CJ PHARM successfully joined the list of stocks eligible for trading through the Hong Kong Stock Connect by June 30, 2024. The stock market was closed on September 6 due to a typhoon, and the index adjustments scheduled for September 2024 were postponed to September 10, when the new phase of the Hong Kong Stock Connect officially took effect. With the stock now eligible for trading through the Stock Connect, HEC CJ PHARM has begun to reap the benefits. In general, being included in the Hong Kong Stock Connect means receiving authoritative recognition and is often seen as a sign of being a high-quality company. For companies like HEC CJ PHARM, the most significant advantage of being included in the Stock Connect is the improvement in liquidity. Since the launch of the Shanghai-Hong Kong Stock Connect at the end of 2014, the southbound capital has continuously flowed into the Hong Kong stock market, with total net purchases of Hong Kong stocks reaching 3.1 trillion Hong Kong dollars by the end of April this year, making it a significant buyer in the Hong Kong stock market. The average daily trading volume in the Hong Kong stock market surged to 90.5 billion Hong Kong dollars after the opening of the Shanghai-Hong Kong Stock Connect in 2015-2023, and the proportion of daily trading volume through the Stock Connect gradually increased from 4.3% in 2015 to 33.4% in 2023. This demonstrates the significant role of southbound capital inflows in improving liquidity in the Hong Kong stock market. On September 10, despite the overall decline in the biopharmaceutical sector of the Hong Kong stock market, HEC CJ PHARM opened high in the morning and continued to rise throughout the day, with the stock price peaking at 6.31% and remaining among the top three in the sector. The trading volume on that day was 4.789 million shares, with a turnover of 43.3891 million Hong Kong dollars, higher than before the Stock Connect opening on August 16, indicating a significant increase in liquidity. The company's brokers on September 10 included China Securities (Shenzhen-Hong Kong Stock Connect) and China Investment (Shanghai-Hong Kong Stock Connect) as the main buyers, with China Securities net buying 1.3884 million shares and China Investment net buying 359,800 shares on that day, indirectly confirming the important role of the Stock Connect in improving the company's stock liquidity. Looking at the performance of previous stocks included in the Stock Connect, it is evident that the market's attractiveness is often influenced by the current market trends. For example, during the last round of stock inclusion, UBTECH ROBOTICS and FOURTH PARADIGM performed the best due to the influence of the humanoid Siasun Robot & Automation and AI trends in the market at the time, and both companies were well-known in the industry, attracting capital inflows. Despite the disruption caused by the Biosecure Act on the Hong Kong biopharmaceutical sector on the day of the company's inclusion in the Stock Connect, the overall trend shows that under the expectation of a Fed rate cut, the global biopharmaceutical financing winter is fading, and it remains a critical period for the rebound of the Hong Kong healthcare sector. As a high-quality stock in the Hong Kong biopharmaceutical sector, HEC CJ PHARM, which is now eligible for trading through the Stock Connect, is likely to continue to attract southbound capital. With a solid foundation, the direction is clear After being included in the Stock Connect, the continuous influx of southbound capital may become the norm for HEC CJ PHARM. For investors in the Stock Connect, buying HEC CJ PHARM is both an investment in the present and in the future. For the company, being included in the Stock Connect is just the beginning of its valuation leap and stock price surge. From a fundamental perspective, in recent years, HEC CJ PHARM has been able to maintain stable performance thanks to the strong momentum released by its product pipeline driven by the integration of production and sales. For example, in the first half of this year, the company's sales of the pediatric anti-infection product line, represented by the core product Kanwei, reached 1.865 billion yuan. The success of this drug as a "miracle drug for flu" in China and its ability to maintain expected sales performance in the first half of this year, despite a high base in the previous year, is due to the company's control over the domestic market for Oseltamivir raw materials and its flexibility in production and sales coordination throughout the product life cycle, solidifying its competitive edge. In addition to the core product Kanwei, the group purchasing and new retail line, as well as the innovative drug business line, are gradually becoming important contributors to the performance of HEC CJ PHARM. For example, the company's group purchasing and new retail line achieved revenue of 346 million yuan in the current period, an increase of 60.8% from the same period last year. At the same time, the company's chronic disease line, represented by insulin, is gradually entering a period of harvest, achieving revenue of 180 million yuan during the reporting period, a significant increase of 140.7% from the same period last year. Overall, with its integrated research, production, and sales advantage, HEC CJ PHARM has become one of the few innovative drug companies in the Hong Kong biopharmaceutical sector that has achieved stable growth and meets the criteria for both "high-quality companies in the Stock Connect" and "undervalued stocks." For investors in the Stock Connect, it is clearly an important option for investing in innovative healthcare stocks in the Hong Kong stock market. However, the above only reflects the current potential investment value of HEC CJ PHARM, and its future appreciation potential is also worth the attention of investors. It is understood that HEC CThe parent company of J PHARM decided this year that its pharmaceutical industry will no longer continue the past innovative research and development and independent business layout. Instead, it chose to push the merger of Guangdong Hec Technology Holding pharmaceutical industry and HEC CJ PHARM.After integration, the newly listed company will combine the research and development strengths and overseas sales advantages of Guangdong Hec Technology Holding in the pharmaceutical industry with the domestic sales strengths of HEC CJ PHARM, becoming a comprehensive pharmaceutical company integrating research, production, and sales, further harnessing economies of scale and synergies. On the research and development front, the integrated pipeline of Guangdong Hec Technology Holding currently has over 100 drugs in development, covering areas such as infections, chronic diseases, and tumors. As of now, the company has applied for over 2,300 invention patents, including 880 overseas patents. According to a Frost & Sullivan report, from 2014 to 2023, the company ranked first in the number of patent publications and patent approvals in the Chinese pharmaceutical industry. It is worth mentioning that Guangdong Hec Technology Holding is expected to complete the application for the market entry of several new drugs around 2026, and the realization of the rich research and development pipeline will bring new growth points to the company's performance. In terms of production and sales, the newly integrated Guangdong Hec Technology Holding will be one of the few companies in China with a complete production line from raw materials to formulations, as well as a comprehensive pharmaceutical company with a vast sales and distribution network comprising over 1,700 professional sales personnel covering more than 2400 tertiary hospitals, over 8900 secondary hospitals, and over 65,000 primary hospitals in 32 provincial-level administrative regions and nearly 300 prefecture-level cities. In other words, Guangdong Hec Technology Holding is expected to achieve comprehensive results in research, production, and sales integration in the near future. From a secondary market valuation perspective, referring to the PE levels of comparable companies such as HANSOH PHARMA and SINO BIOPHARM in the Hong Kong stock market, estimating at a P/E ratio of 20 times, it is expected that the IPO market value of Guangdong Hec Technology Holding could exceed HK$40 billion, indicating a clear signal of the company's future intrinsic value release.