Zhongtai Securities: Recommend focusing on consumer healthcare sectors such as traditional Chinese medicine and aesthetic medicine that actively expand their product offerings, as well as the healthcare services sector that has undergone a long-term adjustment.

China Securities pointed out that investors should seize the opportunity in the pharmaceutical sector’s structural trend, continuously focusing on pharmaceutical/medical AI+ stocks with positive fundamentals and light institutional holdings. This week, the CSI 300 rose by 0.36%, while the healthcare and biopharmaceutical sector declined by 0.81%, ranking 21st among 31 primary industry categories. Medical services increased by 0.22%, with chemical pharmaceuticals, bioproducts, medical devices, traditional Chinese medicine, and pharmaceutical commerce decreasing by 0.54%, 0.89%, 1.07%, 1.75%, and 2.68%, respectively. The pharmaceutical market showed clear differentiation this week, with standout performance from AI medical stocks, previously retraced small nucleic acid-related stocks, and stocks with marginal fundamental changes and lighter institutional holdings. We believe that the pharmaceutical sector, which combines technology and consumer attributes, will continue to present a structural trend amid market rotations. Regarding technological attributes, the innovative drug sector experienced a sharp rise followed by a correction over the past year. Compared to early 2025, most stocks are reasonably valued. Therefore, it is recommended to focus on specific sub-sectors (preferably small nucleic acids, in vivo CAR, ADC, second-generation IO, PROTAC, etc.) and companies with marginal fundamental changes and potential for sustained valuation growth. Pharmaceutical/medical AI+ remains a hot new direction, and besides focusing on industry leaders, investors should also consider stocks whose main businesses are not directly related to medical/healthcare AI+ but actively adopt relevant technologies and are expected to realize valuation flexibility in the short to medium term. On the consumer side, most 2025 earnings forecasts have been released, which are reflected in current stock prices. It is advisable to pay attention to stocks in traditional Chinese medicine, aesthetic medicine, and other consumer healthcare sectors that are actively expanding their product lines, as well as the healthcare services sector that has undergone long-term adjustments.