Hangzhou TianMuShan Pharmaceutical Enterprise Co Ltd

The State Council has approved in principle the Traditional Chinese Medicine Revitalization and Development 15th Five-Year Plan, igniting the TCM sector. On July 13, Longshen Rongfa hit the 20 percent daily limit up, Shanghai Kaibao and Biotech Valley surged over 10 percent, Tianmu Pharmaceutical hit the daily limit up, and many other stocks rose in sympathy. CITIC Securities believes that the cliff-like drop in upstream precious medicinal material prices has shed the cost burden, the midstream destocking cycle is nearing its end, and cost savings will flow through to the income statement. The current moment is the optimal window for contrarian positioning in the profit recovery inflection point of the TCM OTC sector. China Post Securities noted that branded TCM companies have stable cash flows, and high-dividend TCM firms are trading at historically reasonable or low valuations, offering allocation appeal in a low-interest-rate environment. It suggests paying attention to names such as Dong-E-E-Jiao, Jumpcan Pharmaceutical, and China Resources Jiangzhong.