\u3000\u3 Guocheng Mining Co.Ltd(000688) 363 Bloomage Biotechnology Corporation Limited(688363) )
Core view
Event: according to the official website of the company, on April 15, the company officially signed the property right transaction contract with China Coal Geology Group Co., Ltd. to acquire 51% equity of Beijing Yierkang Bioengineering Co., Ltd. (hereinafter referred to as “Yierkang bioengineering”) with RMB 233 million. After the equity acquisition, Yierkang biology will become the holding subsidiary of the company.
Yierkang biological deep cultivation of collagen medical end products. The main products of the target company include collagen sponge and artificial bone. At present, the whole chain layout from R & D, production to sales has been realized. In 2019, 2020 and January November 2021, Yierkang achieved revenue of 872525 million yuan, 792855 million yuan and 756798 million yuan respectively; The net profit is 248065 million yuan, 109706 million yuan and 130914 million yuan. As of November 30, 2021, the total assets of the company are 113 million yuan. The company plans to acquire 51% of the target equity with RMB 233 million, corresponding to about 42 times of the net profit in 2020. Enter the collagen industry and expand the bioactive product pipeline and end product matrix. The acquisition will help the company further improve the layout of collagen and ha raw materials, enrich the company’s bioactive product pipeline, and provide strong support for the sustainable development of the company’s future business. Yierkang’s collagen sponge, artificial bone and other products are expected to achieve collaborative layout with the company’s orthopedic products. This M & A is expected to further enrich the company’s medical terminal product pipeline and form a multi department layout. In the future, it is expected to give full play to the resource advantages of the company’s product R & D and hospital sales channels and replicate the successful experience of hyaluronic acid.
The growth rate of collagen market scale in China is significantly higher than that in the global market. Collagen and hyaluronic acid are important substances widely distributed in the human body. They are biological materials with a wide range of applications, including medical health, skin care products, food and so on. According to Grandview research, in 2020, the market scale of collagen raw materials in China was US $1.01 billion, accounting for 6.4% of the global market, and the CAGR in 16-20 years was 6.5%, higher than the global average.
Profit forecast and investment suggestion: this acquisition is expected to form a synergistic effect with the company’s existing raw material business. Collagen will also become another core material of Bloomage Biotechnology Corporation Limited(688363) and further enrich the company’s bioactive product pipeline. Yierkang’s main hospital admission products such as collagen sponge and artificial bone will also help enrich the company’s medical terminal product matrix and form a multi category and multi department layout. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.08/14.4/1.82 billion respectively, the corresponding EPS will be RMB 2.25/2.99/3.80, and the corresponding PE will be 51 / 38 / 30x respectively, maintaining the “buy” rating.
Risk warning: the sales of new products are less than expected; The risk of intensified industry competition; Macroeconomic downside risks.
