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Strategic acquisition of Longtai medical, strengthening the advantages of medical dressing business and maintaining the "buy" rating
On April 8, 2022, the Winner Medical Co.Ltd(300888) board of directors deliberated and passed a proposal and decided to purchase 55% equity of Zhejiang Longtai Medical Technology Co., Ltd. for 730 million yuan. The main business of Longtai medical is the R & D, production and sales of high-end wound dressings. This acquisition is highly consistent with Winner Medical Co.Ltd(300888) 's strategy of building a leader in the high-end wound dressing industry. With the advantages of soundness and Longtai in customers, markets, products, R & D and production, it forms scale and synergy, and jointly creates home health care solutions for users. We maintain the profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 1.300/1.571/1.900 billion yuan, corresponding to EPS of 3.05/3.68/4.45 yuan, and the current share price corresponding to PE of 19.5/16.1/13.3 times. The base of the company's medical sector will return to normal, and the consumption sector will maintain rapid growth. In the long run, the market space is broad, the investment focus will remain unchanged, and the "buy" rating will be maintained.
Longtai medical takes the lead in the business of high-end wound dressing, and the market space of medical dressing is broad
(1) established in 2012, Longtai medical mainly exports high-end wound dressing OEM. At present, it has established a relatively perfect sales system and channel network in the international market, and its products are sold to many countries and regions such as America and Europe. At the same time, Longtai medical also actively expands the Chinese market, which is divided into its own brand innomed sales and Chinese OEM production. In 2021, the income of Longtai medical treatment was 350 million yuan, of which the income of high-end wound dressing products exceeded 280 million yuan, and the net profit deducted was 80 million yuan. (2) In 2020, the global market scale of high-end wound dressing is about US $5.8 billion, and it is expected to reach US $7.2 billion in 2027. At present, China's high-end wound dressing market is still in the initial stage of rapid growth, mainly overseas brands. With the more comprehensive coverage of medical insurance, the deeper understanding of products by doctors and nurses, and the upgrading of patients' requirements for treatment effect, Chinese manufacturers have the advantage of production cost, and are expected to have greater market growth potential and import substitution space.
Winner Medical Co.Ltd(300888) medical business: expand the channel width and increase the market share of core products
Winner Medical Co.Ltd(300888) medical business revenue in 2021 is about 3.9-4 billion yuan, an increase of 159% - 166% over 2019. In terms of the proportion of channels, about 40% are overseas, about 30% are hospitals, and about 30% are OTC pharmacies and e-commerce. Hospital channel revenue is expected to increase by 20% in 2021q1-q3. At present, Winner Medical Co.Ltd(300888) has more than 4000 hospital customers and Longtai medical has more than 600. The company will further expand the channels of hospitals and OTC pharmacies. The R & D level and the number of registration certificates of the company's medical dressings remain ahead in China. While building a leader in the high-end wound dressing industry, the company will also increase the market share of other core products such as disposable combination bags, flat masks, N95 masks and protective clothing.
Risk tip: channel expansion is less than expected, new product sales are less than expected, and industry competition intensifies.
