China Merchants Group: Revaluation and performance rebalancing of China Meheco Group expected, limited impact on CXO by US-China trade tensions, bullish on 3SBIO (01530) and others.

Guotai Junan International released a research report stating that the MSCI China Healthcare Index has risen by 51.9% since the beginning of 2025, outperforming the MSCI China Index by 24.3%. The bank stated that their investment ideas lean towards stability and they are focusing on undervalued stocks opportunities. They recommend buying 3SBIO (01530), GUSHENGTANG (02273), WUXI XDC (02268), and SINO BIOPHARM (01177), with all of them rated as "buy". The bank mentioned that the healthcare sector has experienced a slight pullback recently (MSCI China Healthcare Index fell by 14% since October). They believe that the recent pullback is mainly due to valuation adjustments and rebalancing, which will create a better investment opportunity window in the future. Looking ahead to 2026, the trend of innovative drugs going global is expected to continue in the long term, and the bank will focus on the clinical progress and data realization of drugs that have already gone global as the core catalyst. On the policy front, although the "Biosecurity Law" has been signed into effect, the bank anticipates that the impact of this law on the substantial operations of Chinese CXO companies will be limited.