Lushang Health Industry Development Co.Ltd(600223) (600223)
Event: Shandong Furuida Jinyu Bio-Technology Co.Ltd(600201) Co., Ltd., a subsidiary of the company, publicly listed for capital increase and share expansion on September 24, 2021. It plans to introduce war investment. The newly increased share capital accounts for no more than 17.58% of the share capital after capital increase, of which war investment subscription is no more than 16.90%; A capital increase agreement was signed with the joint purchaser on December 9, 2021, The investor and its proportion in the equity after the capital increase are Guangxi Tencent (8.04%), Nantong Zhaohua (2.29%), Hangzhou zhongdayuan (2.29%), Jinan kinetic energy Jiafu (3.21%) and Shanghai Zhongyuan (1.07%), respectively, as well as the employee stock ownership platform composed of Jinan Mingrui (0.38%) and Jinan Weida (0.30%).
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The introduction of war investment and the active placement of employees have helped the cosmetics business take off. The company’s subsidiary Freda biology introduced war investment, and both parties completed the capital increase and signed an agreement. The investor is a joint purchaser composed of five companies and an employee stock ownership platform composed of two companies, The investors and shareholding ratios are: Guangxi Tencent (Tencent / 8.04%), Nantong Zhaohua (China Merchants / 2.29%), Hangzhou zhongdayuan ( Hangzhou Onechance Tech Corp(300792) / 2.29%), Jinan kinetic energy Jiafu (Shandong Provincial Department of finance, etc. / 3.21%), Shanghai Zhongyuan (1.07%), Jinan Mingrui (funded by 44 core employees of Furuida biology / 0.38%) and Jinan Weida (contributed by 47 key employees of Freida biology / 0.30%), accounting for 17.58% of the total share capital after the capital increase. The five joint purchasers have good Internet and new media operation advantages, rich channels and marketing resources, which are expected to enable the cosmetics business; at the same time, the introduction of employee stock ownership platform is expected to fully mobilize the enthusiasm of employees; optimize the governance structure and help the cosmetics business to grow rapidly Rapid development.
Track bonus + strong R & D endorsement, cosmetics business development can be expected. Yilian, a subsidiary of the company, focuses on hyaluronic acid skin care. With the help of more than 30 years of hyaluronic acid R & D strength of Freida medicine, the company continuously upgrades its products, grabs the hot ingredients in the market, extends its product series and quickly occupies the market; Dr. yu’er has become a rookie in the field of functional skin care, with a good growth momentum through the joint development of multiple platforms. According to Frost & Sullivan data, the company’s subdivided industry has a compound growth rate of 26% in 16-20 years. Backed by the strong R & D endorsement of Freida medicine, the innovation of core components and the continuous promotion of new products can be expected. Relying on the track dividend and strong R & D background, the cosmetics business in the future is expected to go to a higher level with the help of war investment.
The real estate and raw material businesses have their own advantages, and the medical beauty business is under layout. In terms of real estate business, the marginal change of real estate bond financing + relaxation of sales restriction policy, and the company’s real estate accounts for the main profit, which is expected to benefit from the recovery of marginal changes in industrial policies; At the same time, the property service area of the company is growing rapidly, and it is expected that Hong Kong stocks will be listed independently. In terms of raw material business, the company has sufficient production capacity of hyaluronic acid raw materials and is actively applying for the sales qualification of pharmaceutical grade sodium hyaluronate. With the cost-effective price strategy, the share is expected to continue to increase. In terms of medical beauty business, the company has begun to develop three kinds of hyaluronic acid injection products, cooperate in research and development of collagen products, and layout a class of spray and dressing products for medical devices, which is expected to gain a certain share in the medical and American market.
Profit forecast and investment rating: we maintain the company’s profit forecast. It is estimated that the company’s revenue from 2021 to 2023 will be 12.6 billion yuan / 13.57 billion yuan / 14.61 billion yuan respectively, with a year-on-year growth rate of – 7.5% / 7.7% / 7.7% respectively, and the net profit attributable to the parent company will be 750 million yuan / 890 million yuan / 1.06 billion yuan respectively, with corresponding valuations of 19.8 times, 16.7 times and 14.1 times respectively. We believe that the company’s introduction of war investment will empower the cosmetics business in terms of marketing and channel resources and help the rapid development of the cosmetics business. At the same time, the real estate, raw material medicine and other businesses have their own points of view, continue to be optimistic about the company’s future development and maintain the “buy” rating.
Risk factors: the growth of cosmetics business is less than expected; The increase of online traffic cost affects the profit margin; Affected by policies and other factors, the real estate business has the risk of decline.
