\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Event:
Huaxi announced: on April 15, 2020, Bloomage Biotechnology Corporation Limited(688363) and China Coal Geology Group Co., Ltd. officially signed the property right transaction contract to acquire 51% equity of Beijing Yierkang Bioengineering Co., Ltd. and officially entered the collagen industry.
Key investment points:
Yierkang has been deeply engaged in collagen medical products for many years, and the company acquired 51% of its equity to achieve holding. Beijing Yierkang biology was founded in 1997. Its main products cover consumables, pharmaceutical products, skin care products, etc.: 1) consumables: “Beiling” collagen sponge won the title of “national key new product”. At present, the annual production capacity is 1 million tablets / national market share is about 30%; 2) Medical products: “Ruifu” artificial bone is a nano medical product (bionic bone material), which has similar composition and nano structure to human bone; 3) skin care product: YEK collagen moisturizing facial mask, which contains rich collagen solution and hyaluronic acid natural moisturizing ingredients, and add nicotinamide, aloe vera extract and so on. From January to November of 2019 / 20 / 21, Yierkang achieved revenue of 87.25/79.29/75.68 million yuan and net profit of 24.81109713.09 million yuan respectively (net interest rate of 28.4% / 13.8% / 17.3%). The acquisition of 51% equity of Yikang and the sustainable development of Yikang’s biological business are expected to enhance the market competitiveness of Yikang.
Collagen has broad application prospects, and the growth rate of Chinese market is faster than that of the world. Similar to hyaluronic acid, collagen is also an important substance widely distributed in the human body. It is a biomaterial with a wide range of applications, covering medical and health care, skin care products, food and so on. According to the data released by Grandview research, the global collagen market reached US $15.4 billion in 2019 / CAGR reached 5.4% in 201627, while China’s collagen market reached US $983 million in 2019 / CAGR reached 6.5% in 201627 (faster than the world), of which the shares of medical and health / food and beverage / skin care products applications were 47.8% / 32.1% / 13.6% respectively. It is expected that the medical and health field will still be the main driving force for the market growth of China’s collagen industry in the future. Yierkang has realized the whole chain layout from R & D, production to sales. After acquiring 51% of its equity, the company officially entered the collagen industry, which is expected to form a synergistic effect with self-developed collagen raw materials (key technology breakthroughs have been completed) and has broad prospects in the future.
The skin care business maintained strong growth, and joined hands with capital to set up a fund to deeply explore the ecological layout of skin science. The company plans to participate in the establishment of a private equity fund “Hainan Haixi equity investment partnership” with the related party Shanghai doctor group and other partners, with a target raising scale of 123 million yuan. The main shareholders of the doctor group are experts in the field of dermatology. The sponsors include Professor Zheng Zhizhong, former director of Dermatology of Huashan Hospital Affiliated to Fudan University, Professor Wen Hai, chairman of the professional committee of Dermatology and venereal diseases of Shanghai Society of integrated traditional Chinese and Western medicine, etc. the revenue / net profit in 2021 was 2.92 million yuan / 550000 yuan. The fund is mainly oriented to the fields of skin science and life science, focusing on the research and development of effective skin care and brand incubation, and is expected to quickly realize the effective empowerment of industrial and professional resources. From January to February 2022, the company achieved a revenue of 640 million yuan / + 55%, and the revenue growth remains strong. It is expected that the skin care business will be the core driving force.
Profit forecast and investment rating: the company is expected to achieve revenue of RMB 6.88/91.5/11.57 billion in 2022 / 2023 / 2024, with a year-on-year increase of 39.1% / 32.90% / 26.50%. The net profit attributable to the parent company is expected to be 997 / 1286 / 1657 million yuan, with a year-on-year increase of 27% / 29% / 29%, maintaining the rating of “overweight”.
Risk tips: 1) substantial increase in flow cost; 2) Overseas brands cut prices to seize market share; 3) Product quality problems; 4) Stricter supervision leads to the new products being less than expected; 5) The rapid rise of cutting-edge brands intensifies competition; 6) If relevant materials and data are inconsistent with Bloomage Biotechnology Corporation Limited(688363) announcement, the announcement of the company shall prevail; 7) The synergy benefit is lower than the expected risk.