\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 607 Shanghai Pharmaceuticals Holding Co.Ltd(601607) )
Events
Shanghai Pharmaceuticals Holding Co.Ltd(601607) announcement the application for non-public offering of A-Shares was approved by the CSRC. The company announced that the application for Shanghai Pharmaceuticals Holding Co.Ltd(601607) public offering of A-Shares in 2021 was approved by the issuance and Examination Committee of the CSRC, completing the last approval procedure.
Brief comment
The mixed reform was approved, and the reform improved the long-term investment value of Shanghai Pharmaceutical
Shanghai Pharmaceuticals Holding Co.Ltd(601607) put forward the plan of non-public offering of A-Shares in May 2021, and planned to issue about 853 million A-Shares to Yunnan Baiyao Group Co.Ltd(000538) and the controlling shareholder Shanghai Tandong, a subsidiary of Shanghai real estate group, at the price of 16.87 yuan / share, raising 14.384 billion yuan. Upon the completion of the issuance, Yunnan Baiyao Group Co.Ltd(000538) will hold 18.02% of the shares of the company and deeply participate in corporate governance and operation as a strategic investor. This approval will have a significant impact on Shanghai Pharmaceuticals Holding Co.Ltd(601607) future operation from at least three aspects:
1) shareholders and management level, which is conducive to further improve the management system and incentive mechanism of Shanghai Pharmaceutical. According to the shareholders’ agreement, after the fixed increase is completed, Yunnan Baiyao Group Co.Ltd(000538) will nominate one candidate for executive director, one candidate for non-executive director and one candidate for supervisor to Shanghai Pharmaceuticals Holding Co.Ltd(601607) to play an active role in Shanghai Pharmaceuticals Holding Co.Ltd(601607) corporate governance; Meanwhile Yunnan Baiyao Group Co.Ltd(000538) in the future, as an important shareholder of the company, will also provide greater support for the company’s business development.
2) at the level of business cooperation, Shanghai Pharmaceutical and Baiyao have great cooperation space in the fields of traditional Chinese medicine, OTC consumer goods and pharmaceutical business Shanghai Pharmaceuticals Holding Co.Ltd(601607) has 7 directly affiliated Chinese medicine enterprises, more than 860 Chinese medicine approvals, 9 core brands of Chinese medicine and 3 confidential formulas of Chinese medicine (babaodan, etc.), which can give full play to Yunnan Baiyao Group Co.Ltd(000538) otc channel advantageous resources and realize the growth of OTC channel revenue; Secondly, we can strengthen the layout and procurement coordination of traditional Chinese medicine resources, jointly build planting bases, and further improve the quality of traditional Chinese medicine from the source; In the field of commercial distribution, Baiyao ranks first in Yunnan Province with a market share of more than 50%, while Shangyao is relatively weak in the national layout. Cooperation with Baiyao will help Shangyao further improve the national commercial territory.
3) the fixed increase fund has a great help to the transformation and upgrading of Shanghai Pharmaceutical. Dingzeng will provide Shanghai Pharmaceuticals Holding Co.Ltd(601607) with long-term, large-scale, innovative and inclusive strategic funds, which will help the company further increase its R & D investment, and finally form a multi-level and phased new product echelon including innovative drugs, improved new drugs and high-end generic drugs in terms of key technical links and pipeline layout Cell therapy builds a new business layout.
Therefore, we believe that the approval of Shanghai Pharmaceuticals Holding Co.Ltd(601607) this fixed increase will have a positive impact on the company’s long-term operation and development. The reform of mixed ownership will help release vitality from the management system and incentive mechanism. At the business level, traditional Chinese medicine, OTC and innovative medicine business will provide impetus for the company’s long-term development. Investors are advised to pay active attention to it.
Profit forecast and investment rating
Shanghai Pharmaceuticals Holding Co.Ltd(601607) is the leader of China Meheco Group Co.Ltd(600056) industry and commerce. The coordinated development of industry and Commerce has advantages. It benefits from the improvement of circulation concentration brought by the pharmaceutical reform and the company’s continuous investment in new drug research and development. The long-term performance has a stable growth with high certainty. Without considering the investment income, we expect the net profit attributable to the parent company from 2021 to 2023 to be 4.943 billion, 5.771 billion and 6.831 billion respectively, with a year-on-year increase of 9.9%, 16.8% and 18.4%; Considering the large investment income of Q1 in 2021, we predict that the net profit attributable to the parent company from 2021 to 2023 will be 5.763 billion, 5.771 billion and 6.831 billion respectively, with a year-on-year increase of 28.2%, 0.1% and 18.4%, corresponding to earnings per share of 2.03, 2.03 and 2.40 yuan. The current A-share price corresponds to the valuation of 9.5, 9.5 and 8.0 times PE from 2021 to 2023, The share price of H shares corresponds to only 5.7, 5.7 and 4.8 times PE (calculated according to the central bank central parity of Hong Kong dollar against RMB on March 14, 2021), maintaining the a + H buy rating.
Risk tips:
Covid-19 epidemic is serious, which makes the recovery progress of hospital diagnosis and treatment lower than expected;
The progress of new drug research and development is lower than expected;
The progress of core variety consistency evaluation was slower than expected;
The performance of the subject matter of epitaxial M & A did not meet expectations, resulting in significant impairment of goodwill.
