Goldman Sachs: The mainland medical sector will rely more on data and profit visibility this year, optimistic about CDMO companies

Goldman Sachs' research report indicates that the strong trend in the mainland healthcare sector last year will continue into this year. However, investors are considering more of the value of R&D pipelines when assessing valuations, leading to stock trading being more based on the actual execution capabilities of companies rather than merely expectations of licensing deals. This year, achieving returns that exceed the industry will rely more on the release of key data, actual transactions, and visibility on profit realization or turning points.

In terms of specific segments, the bank has become more constructive on CDMO companies, based on their accelerated growth, strong product cycles, limited geopolitical risks, and reasonable valuations; it has upgraded WuXi AppTec (02359.HK)(603259.SH) and WUXI XDC (02268.HK) to "Buy."

As for biotechnology and pharmaceutical companies, the bank has adopted a selective strategy, favoring companies with key data releases and early data showing some prospects, along with expectations of actual transactions; it is optimistic about SKB BIO (06990.HK), HENLIUS (02696.HK), and HANSOH PHARMA (03692.HK).

The bank maintains a neutral view on the medical device sector, noting that while the industry has bottomed out, it will take time to gradually recover; it recommends buying ANGELALIGN (06699.HK) and WEIGAO GROUP (01066.HK). In the medical services sector, the bank remains relatively cautious due to the ongoing impact of cost control measures and a weak consumer cycle; it has downgraded HYGEIA HEALTH (06078.HK) and JXR (01951.HK) ratings to "Neutral" and "Sell," respectively