\u3000\u3 Shengda Resources Co.Ltd(000603) 939 Yifeng Pharmacy Chain Co.Ltd(603939) )
Promote retail integration, improve the overall profitability of the company and maintain the “buy” rating
On April 24, the company announced that it planned to acquire Jiuzhitang Co.Ltd(000989) 43467800 shares, accounting for 500001% of the total share capital of Jiuzhitang Co.Ltd(000989) as of March 31, with a transfer price of 9.85 yuan per share and a total transaction consideration of 428157830 yuan (428 million yuan); It is proposed to acquire 51% equity of Hunan Jiuzhitang Co.Ltd(000989) Pharmaceutical Co., Ltd., a subsidiary of Jiuzhitang Co.Ltd(000989) at a transaction price of 204 million yuan Jiuzhitang Co.Ltd(000989) is a “Chinese time-honored brand” with a history of more than 300 years and a national key traditional Chinese medicine enterprise, with strong market influence. The subsidiary Hunan Jiuzhitang Co.Ltd(000989) pharmaceutical has 190 self operated chain pharmacies and 359 franchised pharmacies, which have a good reputation and stable customer base. After the acquisition, the company will continuously improve its profitability by reducing commodity procurement costs and strengthening professional service levels. Considering that the acquisition has not yet been completed, based on the growth rate in the first three quarters and the expected increase in expenses in the fourth quarter, we lowered our profit forecast for the company. It is expected that the net profit attributable to the parent company will be adjusted from RMB 964 / 12.621613 million to RMB 923 / 11.551476 million from 2021 to 2023, and the EPS will be 1.28/1.61/2.05 yuan / share respectively. The current share price corresponding to PE is 27.4/21.9/17.1 times respectively. The company has strong fine management ability, the performance is expected to continue to grow and maintain the “buy” rating.
Further promote the extension of industrial chain and enhance the company’s competitive advantage
This transaction will promote the company to further expand upstream channels, carry out in-depth cooperation in the production and sales of industrial varieties through wider business cooperation with Jiuzhitang Co.Ltd(000989) to enhance the company’s commodity differentiation competitiveness and promote the continuous optimization of the company’s supply chain system. The company will also rely on its own resources to actively import Jiuzhitang Co.Ltd(000989) products, so as to realize resource sharing, win-win cooperation and common development. After the completion of the 51% equity transaction of Hunan Jiuzhitang Co.Ltd(000989) pharmaceutical, the two sides will form a joint force in the Hunan market to further consolidate the company’s leading advantage in the Hunan market.
It is expected to have a positive impact on the performance and provide a new driving force for the long-term steady growth of the performance
After the completion of the transaction, the company will hold Jiuzhitang Co.Ltd(000989) 5% equity and 51% equity of Hunan Jiuzhitang Co.Ltd(000989) pharmaceutical, which will have a positive impact on the company’s performance. Of which, Jiuzhitang Co.Ltd(000989) 2021 achieved an operating revenue of 3.784 billion yuan and a net profit attributable to the parent company of 124 million yuan; The company expects that after the business integration of Hunan Jiuzhitang Co.Ltd(000989) pharmaceutical is completed, the first annual sales will not be less than 1.137 billion yuan and the net profit will not be less than 18.4 million yuan.
Risk tip: store expansion speed, post integration and profitability are lower than expected.
