\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 88 Winner Medical Co.Ltd(300888) )
It plans to acquire 55% equity of Longtai medical with 728 million yuan, and may acquire all its remaining equity in the future
The company plans to purchase 55% equity of Longtai medical from Wu Kangping, Huang Lepei and Wu Di with its own capital of 728 million yuan to become the controlling shareholder of Longtai medical. In this acquisition, Longtai medical is valued at 1.337 billion yuan, corresponding to 15.5 times PE in 2021.
The target companies of this transaction are Longtai medical, its wholly-owned subsidiaries Xi’an longtem, Longtai silica gel and Shengyi technology. Longtai medical, Xi’an longtem and Longtai silica gel are mainly engaged in high-end wound dressing business; Shengyi technology is mainly engaged in the sales and operation of Longtai medical products on the e-commerce platform, which is similar to that of Longtai medical
The high-end wound dressing business is synergistic.
In terms of finance, in 2021, the income of Longtai medical treatment was 355 million yuan and the profit was 863739 million yuan; Xi’an longtem has a revenue of 0 and a profit of -478700 yuan; Shengyi technology has a revenue of 5.161 million yuan and a profit of 36000 yuan; Longtai silica gel is mainly the internal service of Longtai medical. It has not yet carried out its business independently and has no operating revenue and profit; In 2021, the total pro forma income of the subject matter is 360 million, and the total pro forma profit is 859312 million. 55% of the equity corresponds to the parent profit of the listed company of 472622 million.
In 2020, the income of Longtai medical treatment was 401 million yuan and the profit was 128 million yuan; Xi’an longtem has a revenue of 0 and a profit of -481400 yuan; Shengyi technology has a revenue of 4.294 million yuan and a profit of 391800 yuan; Longtai silica gel has no operating income and profit; In 2020, the total pro forma income of the subject matter is 405 million, and the total pro forma profit is 129 million. 55% of the equity corresponds to the parent profit of the listed company of 707024 million.
If the CAGR of non net profit deducted by Longtai medical from 2021 to 2026 is not less than 5%, or the cumulative non net profit deducted from 2022 to 2026 is not less than 475 million yuan, and Winner Medical Co.Ltd(300888) holds the equity of the target company and is approved by the regulatory authority, Winner Medical Co.Ltd(300888) will acquire all its remaining equity in 2027 with the corresponding PE multiple of non net profit deducted by Longtai medical in 2026 as the valuation.
The main business income of Longtai medical is growing rapidly, and the high-end dressing products are leading the industry
Longtai medical is a high-end wound dressing OEM export enterprise. It mainly develops, produces and sells silicone foam, hydrocolloids, silicone gel, hydrogel, film applicator and stoma. It has the leading R & D, production and sales capabilities, and is highly recognized by the high quality customers in China’s foreign market. At present, Longtai medical mainly focuses on export. It has established a relatively perfect sales system and channel network in the international market. Its products are sold to Europe, America and other countries and regions, and has established stable cooperative relations with many international well-known medical device brands; At the same time, actively expand the Chinese market, which is divided into private brand innomed sales and Chinese OEM production.
In 2021, the sales revenue of Longtai medical exceeded 350 million yuan, a decrease of 11.6% at the same time, mainly due to the high income of epidemic prevention products in 20 years. Excluding this factor, the main business income of medical dressing increased by 30% at the same time. Among the total revenue, the total sales revenue of high-end wound dressing products exceeds 280 million yuan, which is in the leading position in the industry among China’s high-end wound dressing enterprises.
Improve the strategic layout of high-end wound dressing, and join forces to form scale and synergy
1) the export market of high-end dressings continues to grow, and the two cooperate to seize a greater market share. According to the QYResearch report, the global high-end wound dressing market reached US $5.846 billion in 2020 and is expected to reach US $7.23 billion in 2027. With the increasing pressure on fee control in European and American markets, international customers tend to large-scale manufacturers with stable production capacity and quality. It is expected that China’s export market of high-end wound dressing will maintain healthy growth and tend to be concentrated.
Longtai medical and Winner Medical Co.Ltd(300888) are the first batch of Companies in China to develop, produce and export high-end wound dressings. They have long-term and stable accumulation of high-quality customers in this field. The two sides form a leading effect through sales and product research and development, and are expected to obtain greater market share and higher income growth.
2) China’s high-end dressing market has great growth potential and import substitution space. They work together to become the preferred brand of Chinese hospitals. The market of high-end wound dressings in Chinese hospitals is still in the initial stage of rapid growth, and is currently dominated by overseas brands. With the comprehensive coverage of medical insurance, the deepening understanding of products by doctors and nurses, the upgrading of patients’ requirements for effects, and the production cost advantages of Chinese manufacturers, it is expected that the market growth potential and import substitution space are large.
Longtai medical has more than 600 hospital customers and Winner Medical Co.Ltd(300888) covers more than 4000 hospitals. Its brand reputation is recognized by the top 100 hospitals in China. Combined with Winner Medical Co.Ltd(300888) existing wound care, operating room consumables, disease control and protection products and disinfection and cleaning products, the two sides work together to build a comprehensive one-stop service and strive to become the preferred brand of Chinese hospitals.
3) create home health care solutions and realize 2C end business collaboration. With more than 20 years of clinical experience, Mr. Wu Kangping, founder of Longtai medical, not only designed and innovated a large number of high-end wound dressing products, but also actively developed a complete set of solutions for household stoma, wound care, skin management and so on Winner Medical Co.Ltd(300888) has two famous brands ” Winner Medical Co.Ltd(300888) ” and “cotton era”, of which Winner Medical Co.Ltd(300888) covers more than 120000 pharmacies and has more than 9 million online fans; There are more than 330 offline stores in the cotton era, covering more than 60 cities, with more than 35 million online + offline members Winner Medical Co.Ltd(300888) will empower Longtai medical based on its own brand strength, membership base, all-round sales channels and digital operation ability to solve the pain points for users and create a home health care solution.
4) Winner Medical Co.Ltd(300888) will continue to create value for users by using intelligent manufacturing and digital management system.
Winner Medical Co.Ltd(300888) has more than 30 years of experience in the production and quality management of medical consumables. With its leading R & D ability, market competitiveness and high-quality products, “all cotton Spunlaced non-woven fabric and its products” has been selected as the single champion of the national manufacturing industry Winner Medical Co.Ltd(300888) will fully empower Longtai medical by using its own intelligent manufacturing system, digital operation system, digital procurement and supply chain management system, all-channel digital operation system, digital warehousing and logistics delivery system to create value for users.
Raise the profit forecast and maintain the buy rating
After this acquisition, the company’s strong and strong in the field of medical supplies developed jointly, gained a greater share in the export market and the Chinese market, and achieved 2C end business collaboration. We estimate that the company’s net profit attributable to the parent company in 22-23 years is 1.62 billion and 1.95 billion respectively (1.56 billion and 1.87 billion respectively before), the corresponding EPS is 3.80 and 4.57 yuan / share respectively (3.7 and 4.4 yuan / share respectively before), and the corresponding P / E is 15.9 and 13.2x.
Risk tip: the lack of resource integration advantages and synergy leads to the risk that the acquisition effect is less than expected and the industry competition intensifies
