Brokerage Morning Meeting Highlights | AI in Pharmaceuticals Has Great Potential, and the Industry Chain Is Expected to Continue Benefiting

Last Friday, the market experienced a volatile rebound. The Shanghai Composite Index opened low but closed high, and the Sci-Tech 50 Index rose over 2.5%. The total transaction volume in the Shanghai and Shenzhen markets was 2.66 trillion yuan. From a sector perspective, concepts such as innovative drugs, CRO, PCB, rare earth permanent magnets, and 6G performed strongly. On the downside, information security concepts underwent collective adjustment. By the close, the Shanghai Composite Index rose by 1.02%, the Shenzhen Component Index rose by 1.42%, the ChiNext Index rose by 1.35%, and the Sci-Tech 50 Index rose by 2.51%. In todays morning meeting with brokerages, China Securities Co., Ltd. believes there is great potential in AI pharmaceutical development, and the industry chain is expected to continue benefiting. Guotai Haitong believes the AI technology direction is focusing on downstream applications. Huatai believes that attention should be paid to valuation recovery in the context of mid-term report pricing. China Securities Co., Ltd.: Great potential in AI pharmaceuticals, and the industry chain is expected to continue benefiting. The AI pharmaceutical field is undergoing rapid iteration and transformation. The updates of algorithms and the support of computing power have laid a solid foundation for the application of AI in the pharmaceutical field. The traditional drug development process takes a long time, costs a lot, and has a low success rate. As new drugs targeting existing sites continue to be approved, the difficulty of new drug development is gradually increasing. In recent years, the development of AI, particularly deep learning, has facilitated its application in target screening, molecular generation and optimization, ADMET prediction, polymorph prediction, and synthetic route selection, leading to continued growth in investments for AI-driven development of macromolecular drugs. AIDD is expected to reshape the early drug discovery process, significantly speeding up the efficiency and success rate of early drug screening, with an increase in related dry lab investments and ongoing growth in the demand for wet lab experiments, which is likely to continuously bring incremental benefits to the downstream industry chain. Guotai Haitong: AI technology direction focuses on downstream applications. The AI technology bull market will continue; however, it will need to rely on new fundamental logic and new investment opportunities. The AI wave has already begun to enter the second half of the year, and AI applications and "AI +" will empower various industries and drive the AI bull market into its latter stage. The new logic of the second half of the AI bull market will shift from a hardware-led focus to an application-led focus. If the AI industry chain can establish a new sustainable growth logic in the second half of the year, the autumn market will be a period for the AI bull market to find new main lines for the trends and nurture new dominant industries or sectors. Huatai: Focus on valuation recovery under mid-term report pricing. Last week, the A-shares gently rebounded with increased volume, and risk appetite marginally improved, with oversold rebounds becoming the main trading clue, particularly for small caps showing significantly stronger elasticity than large caps. There is still room for oversold rebounds to unfold, with a key focus on the ChiNext Index. In terms of timing, the concentrated period for mid-term reports in mid to late August may serve as a window to assess the quality of the rebound. In terms of allocation, it is recommended to anchor towards a balanced configuration based on mid-term reports. The oversold rebound in AI hardware remains participatory, but the retention of public funds or the lack of clearing of their chips may limit the upside, necessitating controlled position exposure, with a preference for communication equipment. Among other oversold varieties, it is advisable to pay attention to energy metals and minor metals. In Julys relative defensiveness, continue to monitor non-bank and CXO leaders with acceptable cost-performance ratios. From a mid-term perspective, the cost-performance ratio in international supply chains and essential consumption is at an overweight window. The dividend bottom position should continue to be held, with a structural emphasis on banks and transportation. This article is reproduced from "Cailian Press," edited by Liu Jiayin.