\u3000\u3 Shengda Resources Co.Ltd(000603) 939 Yifeng Pharmacy Chain Co.Ltd(603939) )
Performance review
On April 24, the company announced that it would purchase Hunan Jiuzhitang Co.Ltd(000989) 51% equity with 204 million yuan, and the price of Hunan Jiuzhitang Co.Ltd(000989) 100% equity was 400 million yuan.
Business analysis
The transaction price is 204 million yuan, and the annual profit of the subject matter is expected to increase by 119% after the transaction. The estimated value of all shareholders' equity of the target company at the end of 2021 is 390 million yuan. After the completion of transaction operation integration, the announcement predicts that the sales volume of the target company in the first year will not be less than 1.14 billion yuan (+ 9%), and the net profit will not be less than 18.4 million yuan (+ 119%).
Hunan Jiuzhitang Co.Ltd(000989) is deeply rooted in the province, giving consideration to retail and wholesale business. Hunan Jiuzhitang Co.Ltd(000989) has 190 direct chain stores and 359 franchise stores in Hunan Province; It has two subsidiaries, Hunan Jiuzhitang Co.Ltd(000989) retail chain and Changde Jiuzhitang Co.Ltd(000989) retail chain, which are respectively engaged in drug retail and drug wholesale business. In 2021, the operating revenue of the target company was 1.044 billion yuan, including 520 million yuan of direct retail, accounting for 49.8%; The wholesale business was 282 million yuan, accounting for 27%; Franchise distribution is 120 million yuan, accounting for 11.5%; B2C business is 70 million yuan, accounting for 6.7%.
Strengthen the layout of traditional Chinese medicine products, win-win cooperation and improve profitability. After the completion of the transaction, the new Hunan Jiuzhitang Co.Ltd(000989) general manager is appointed by the company to carry out operation and management according to the company model; At the same time, we purchased Jiuzhitang Co.Ltd(000989) traditional Chinese medicine, medicine and food congeners and other large health products according to the principle of market fairness. After the acquisition, there will be synergy effects: on the one hand, the company's advantages of centralized commodity procurement and high-quality pharmaceutical retail supply chain system can empower the target, and further expand the company's Hunan market and improve the market share; On the other hand, relying on the Jiuzhitang Co.Ltd(000989) brand, the company has conducted in-depth cooperation with Jiuzhitang Co.Ltd(000989) in the production and sales of traditional Chinese medicine varieties, and expanded new stores in the provinces where the company has entered, so as to improve the profitability of the company.
Profit forecast and investment suggestions
As a leading drugstore, the company continued to improve its concentration through extensive M & A. regardless of the impact of consolidation after the acquisition, we gave the company a net profit attributable to the parent company of RMB 967 / 12.2 / 1.55 billion from 2021 to 2023, with a year-on-year increase of 26%, 26% and 27%. Maintain the "buy" rating.
Risk tips
The post acquisition development is less than expected, the extension of M & A is uncertain, the outflow of prescriptions is not as expected, the impact of volume procurement on the variety price of pharmacies, and the impact of online pharmacies on offline pharmacies is uncertain; Goodwill impairment risk.
