Suzhou Iron Technology Co.Ltd(688329) (688329)
Key investment points
Event: the company plans to invest no more than 100 million yuan in the construction of Chuzhou medical and health industry base project. The project is implemented in the form of subsidiaries established by the company with Beijing zhuyitai Technology Co., Ltd., Zhongxin Zhidi Suzhou Industrial Park Co., Ltd. and Hongxiang Holding Group Co., Ltd.
The business layout continues to deepen and highlight the long-term strategic vision. The Chuzhou medical and health industry base project to be invested and constructed is located in Suzhou Chuzhou high tech Industrial Development Zone, with a planned total area of 292 mu. The project will build an industrial base and related supporting facilities with the theme of medical and health, provide one-stop user scenario solutions for display, sales and operation for various high-quality enterprises in the industry, and promote the integration of high-quality medical resources, At the same time, the conference hotel undertakes and organizes various industry conferences, theme forums, industry training and other activities to attract customers for the industry. The project is planned to start construction in June 2022 and put into use in December 2023. The construction period is 18 months. The signing of this strategic framework agreement means the further expansion and deepening of the company’s layout in the field of medical material management, and fully demonstrates the company’s strategic vision for long-term development.
Establish a platform company and a project company to make collective decisions on major issues. The project is implemented by Suzhou Iron Technology Co.Ltd(688329) establishing subsidiaries with Beijing zhuyitai Technology Co., Ltd., Zhongxin Zhidi Suzhou Industrial Park Co., Ltd. and Hongxiang Holding Group Co., Ltd., in which the platform company is included in the scope of Suzhou Iron Technology Co.Ltd(688329) consolidation. 1) The proposed platform company “Suzhou Suzhou Iron Technology Co.Ltd(688329) (Chuzhou) Co., Ltd. (tentative name)”, will set up two sub sectors: project operation company and Research Institute Company according to different business modules, which are respectively responsible for the investment attraction, operation management and Research Institute of the project. At the equity level, Suzhou Iron Technology Co.Ltd(688329) It holds 75%, zhuyitai holds 5%, and Zhongxin Zhidi and Hongxiang holdings hold 10% respectively. 2) It is proposed to establish the project company “zhuyitai (Chuzhou) Industrial Technology Co., Ltd. (tentative name)” to be responsible for the investment development, planning and construction of the project. Suzhou Iron Technology Co.Ltd(688329) , zhuyitai, Zhongxin Zhidi and Hongxiang holdings hold 27%, 3%, 30% and 40% respectively. 3) in the platform company (including the subsidiaries of the platform company) and the project company, the cost bidding, procurement and finance are jointly signed by all parties. Ailong construction medical platform consortium, Zhongxin Zhidi and Hongxiang holdings each appoint a director to form the board of directors. Major matters (selection of operation and management team, business performance evaluation, etc.) pass the collective decision-making of the board of directors. In addition, Suzhou Iron Technology Co.Ltd(688329) It has the right to assign the financial personnel of the platform company, and zhuyitai has one vote veto on the expansion of the non main business of the project company.
All parties complement each other and are expected to achieve win-win results. 1) Partners are rich in resources and realize complementary advantages. Zhuyitai is committed to providing customers with resources and intelligent services in the hospital construction industry. It has become an o2o innovation ecological platform in the field of hospital infrastructure in China. It hosts the annual National Hospital Construction Conference and China International Hospital construction Equipment and Management Exhibition (CHCC) is known as the Flagship Exhibition in the field of hospital construction. The exhibits cover the sections of hospital architectural design and environmental innovation, medical special engineering and scientific and technological innovation, and smart hospital and service innovation. According to the official website of Juzhan, the National Hospital Construction Conference will have an exhibition area of 100000 square meters in 2021, 700 exhibitors and 46782 professional visitors; it will be held in Wuhan in 2022 Han International Expo Center, with standard booth of 2300 yuan / m2 and bare booth of 2100 yuan / m2. Zhongxin Zhidi is China-Singapore Suzhou Industrial Park Development Group Co.Ltd(601512) (the location of the project is China-Singapore Suzhou Industrial Park Development Group Co.Ltd(601512) in Suzhou Chuzhou high tech Zone) It is a joint venture with Chuzhou City) and is positioned as a park operator in the District, focusing on the construction of a high-standard Industrial Park. The development projects involve long-term rental apartments, factories, businesses, offices, residences and hotels. The representative projects include Suchun industrial square, youth public house, archives management center building in the industrial park, Bank Of China Limited(601988) building, Jinji Lake Kempinski Hotel Suzhou culture and Art Center, etc. Hongxiang holdings is a modern comprehensive enterprise group integrating construction industry, real estate industry, environmental industry and service industry. By the end of 2020, its total assets will reach 23.5 billion, net assets will reach 7.4 billion and its financial strength will be strong. As the head company in the intelligent management industry of medical materials, Ailong can complement its advantages with other three parties. 2) The division of rights and responsibilities is clear and is expected to win-win cooperation. According to the agreement, Suzhou Iron Technology Co.Ltd(688329) and zhuyitai are mainly responsible for the communication and review of the preliminary design scheme of the project, the investment promotion and operation of the project, cooperate and coordinate with the government affairs, clearly implement the recruitment of customers into the park in combination with the project development progress, recruit 60% of the intended customers within 6 months from the date of project construction, and 80% of the intended customers within 1 year from the date of project construction. Zhongxin Zhidi is mainly responsible for the coordination of government affairs and cooperating with the planning, design, construction and financing of the project. Hongxiang holdings is mainly responsible for project planning, design, construction and financing. The clear division of rights and responsibilities in the framework agreement is conducive to all parties to give full play to their own advantages and achieve win-win cooperation.
The track has full long-term potential, and the upsurge of medical institution construction accelerates the short-term growth of the industry. The intelligent management industry of medical materials is in a growth stage with low market saturation. According to the statistics of frost Sullivan, a consulting organization, the overall penetration rate of automation equipment of outpatient pharmacy in China was about 20.0% at the end of 2018. According to the statistics of market segmentation research and trend analysis of automation system of pharmacy in China, as of 2013, The average penetration rate of pharmacy automation system in developed countries has reached about 30%. Therefore, in the long run, China’s intelligent management of medical materials is a blue ocean track with full potential. After the epidemic, all provinces have accelerated the construction of medical remedy boards, and the number of new medical institutions has increased rapidly. The completed investment in health fixed assets increased by 28.9% year-on-year in the first October of 2021, China State Construction Engineering Corporation Limited(601668) 151 billion new medical construction orders were signed in the first three quarters of 2021, a year-on-year increase of 112%. The hot wave of medical institution construction is expected to accelerate the growth of the intelligent management industry of medical materials.
The company’s fundamentals are sound, and its customized service capacity is scarce. In the first three quarters, the company realized an operating revenue of 207 million yuan, a year-on-year increase of 32.83%; The net profit attributable to the parent company was 39.66 million yuan, a year-on-year increase of 38.91%; The non net profit deducted was 36.86 million yuan, a year-on-year increase of 72.17%, and the fundamentals were stable. By the end of 2018, the company had a market share of 28.5% in the field of outpatient pharmacy automation, rich product lines, leading market position, keen insight into market demand, timely response and rapid transformation of customer demand into new products. In addition, the company has the scarce customized service capacity in the industry. In 2020, it won the bid for Nantong Medical Center project, with a project amount of 49.59 million yuan; In the first half of this year, it won the bid for “integrated intelligent storage and distribution system of Kunshan Western medical center” and “procurement and installation of Automatic Pharmacy storage and distribution warehouse of Eastern medical center”, with project amounts of 48.87 million yuan and 43.79 million yuan respectively.
Profit forecast and investment suggestions: due to the uncertainty in the promotion of cooperation projects, we maintain our previous performance expectations. It is estimated that the operating revenue of the company from 2021 to 2023 will be 408 million, 545 million and 726 million respectively, with a year-on-year increase of 31.7%, 33.6% and 33.2%; The net profit attributable to the parent company was 94 million, 122 million and 162 million respectively, with a year-on-year increase of 31.3%, 30.0% and 32.4%, and the corresponding PE was 39.9x, 30.6x and 23.1x respectively, maintaining the buy rating.
Risk warning: the risk that the project progress is not as expected, the risk of product and technological innovation and R & D, the risk of industry competition, the risk of brain drain, and the risk that the public information used lags behind or is not updated in time
