\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 88 Winner Medical Co.Ltd(300888) )
Events
On May 18, the company disclosed the announcement on the acquisition of the controlling stake of Hunan Ping An medical equipment and capital increase.
Key investment points
After the acquisition and capital increase, it holds 68.70% equity of Hunan Ping’an medical equipment and improves the business layout of low-value medical consumables. The company plans to use its own funds of 650 million yuan to acquire 65.55% of the equity of Hunan Ping An medical equipment Technology Co., Ltd. and use its own funds of 100 million yuan to unilaterally increase the capital of Hunan Ping An medical equipment. After the completion of the above transaction, the company will invest a total of 750 million yuan to hold 68.70% of the equity after the capital increase and share expansion of Hunan Ping An medical equipment. The company’s acquisition determines that the price of 100% equity of Hunan Ping An medical equipment before capital increase is RMB 990 million. Based on the net profit of Hunan Ping An medical equipment in 2021 (RMB 85.03 million), the P / E ratio of this transaction is about 11.7 times. The parties to the agreement agree that if the CAGR of non net profit deducted by Hunan Ping An medical equipment from 2021 to 2026 is not less than 10%, and the company still holds the equity of Hunan Ping An medical equipment and the subsequent transaction is approved by the regulatory authority (if necessary), the company will purchase the remaining part or all of the equity with 12 times of non net profit deducted by Hunan Ping An medical equipment in 2026 as the valuation in 2027.
Hunan Ping’an medical equipment is mainly engaged in injection and puncture products, which is the largest category of low-value medical consumables. Founded in August 1993, Hunan Ping’an medical equipment is mainly engaged in the R & D, production and sales of syringes, infusion sets, blood collection vessels, blood collection needles, indwelling needles and other injection and puncture products. It is a national high-tech enterprise and won the “second batch of specialized and special new small giant enterprises” in 2020. The company’s business covers markets at home and abroad. According to the official website of Hunan Ping’an medical equipment, the products of “Ping’an” and “Ping’an guard” produced by the company sell well in provinces and cities all over the country, and are exported to more than 20 countries and regions such as Germany, France and Italy. The products are highly praised by the majority of users and medical workers. In 2021, the operating revenue and net profit attributable to the parent company of Hunan Ping An medical equipment were 360 million yuan and 85.03 million yuan respectively, with a net profit margin of 23.6%. According to the research and analysis of IBM and medical equipment exchange, the market scale of low-value medical consumables in China will reach 221.3 billion yuan in 2025, of which puncture and injection products account for about 28%, belonging to the first category, and medical sanitary materials and dressings account for about 25%, belonging to the second category. With the aging of China’s population, the increase of residents’ visits and the increase of new medical scenes, the growth prospect of injection and puncture industry is broad.
It cooperates and complements with Hunan Ping An medical equipment in many aspects to help the company provide one-stop solutions for medical consumables. After the completion of this transaction, the board of directors of Hunan Ping’an Medical Equipment Co., Ltd. is composed of five directors, of which three directors, including the chairman, are nominated by Winner Medical Co.Ltd(300888) and the remaining two directors are assumed by Zheng Datian, the legal person of Hunan Ping’an Medical Equipment Co., Ltd. and its designated personnel. Winner Medical Co.Ltd(300888) also appoints the person in charge of Finance and the person in charge of risk control and compliance. The acquisition of the company makes up for its own blank in injection and puncture products, and is conducive to the company providing one-stop solutions for medical consumables: 1) in terms of products, the syringes, infusion sets, indwelling needles, puncture bags and other products of Hunan Ping’an medical equipment are matched with Winner Medical Co.Ltd(300888) operating room materials and wound care products to form various combination packages, and finally provide one-stop customized solutions to hospital users. 2) In terms of channels, Hunan Ping An medical equipment has a leading market share in the hospital market of Hunan Province. Winner Medical Co.Ltd(300888) serves more than 4000 hospitals, covers more than 120000 pharmacies, has more than 9 million fans in online channels, and has a large number of high-quality overseas customers in Europe, America and Japan, enabling Hunan Ping An medical equipment to strengthen sales in China and abroad. 3) In terms of production, the company signed the letter of intent for investment with the people’s Government of Li County, Hunan Province, and plans to promote Hunan Ping An medical equipment as the main investor to sign an investment agreement with the people’s Government of Li County, Hunan Province, with an investment of 700 million yuan for the construction of medical equipment production lines, intelligent warehouses, research and development buildings and other supporting facilities to solve the bottleneck of production capacity, and make use of its own intelligent manufacturing system, digital operation system Digital procurement and supply chain management system, digital warehousing and logistics delivery system fully enable Hunan Ping An medical equipment.
Investment suggestion: the company’s acquisition of Hunan Ping’an medical wedge has entered a new track of injection and puncture products, which is highly consistent with the company’s strategy of building a one-stop solution for medical consumables. The company’s medical business product matrix has been continuously improved, and the dual wheel drive attributes of medical treatment and consumption remain unchanged. We expect the net profit of the company from 2022 to 2024 to be RMB 1.465 billion, 1.731 billion and 2.007 billion, with earnings per share of RMB 3.43, 4.06 and 4.70 respectively. The latest closing price corresponds to about 18 times of the company’s 22-year PE, maintaining the “Buy-A” proposal.
Risk tip: the price of cotton in China is rising, the business expansion of medical consumables in China is less than expected, and the business in the era of all cotton affected by the epidemic in China is more than expected.
