\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 88 Winner Medical Co.Ltd(300888) )
Event: the company announced that it plans to acquire 65.55% equity of Hunan Ping An medical equipment Technology Co., Ltd. with its own capital of 652 million yuan, and unilaterally increase its capital to Hunan Ping An medical equipment with its own capital of 100 million yuan. After the transaction is completed, it will hold 68.70% of the underlying equity. After Longtai medical, the company’s medical sector acquired the next city, and its business scope continued to expand.
Comments:
Ping An medical equipment is mainly engaged in injection and puncture products. After M & A, it will increase investment in the medical industry. Hunan Ping An medical equipment is mainly engaged in the R & D, production and sales of syringes, infusion tubes, blood collection vessels, blood collection needles, indwelling needles and other injection and puncture medical devices. Before the capital increase, the company determined that the 100% equity price of Hunan Ping An medical equipment was 995 million yuan, corresponding to 1.70 times of the net profit PE in 2021. If the target company’s compound annual growth rate of deducting non net profit from 2021 to 26 is greater than or equal to 10%, the company shall acquire the remaining shares at a valuation of 12 times of the target company’s deducting non net profit in 2026 in 2027. In addition, after the delivery, the company promoted Ping’an medical equipment as the main investor to sign an investment agreement with Li county government of Hunan Province to build medical equipment production lines, intelligent warehouses, R & D buildings and other facilities, with a total investment of about 700 million yuan to further expand the business scale.
Ping An medical equipment has rich operation experience and leading market share in the industry. Ping An medical equipment is located in Changde City, Hunan Province. Founded in 2010, it has accumulated many years of operation experience in injection and puncture medical consumables. It is a well-known trademark and national high-tech enterprise in the industry. In 2020, it won the “second batch of specialized and special new small giant enterprises”, and has 39 registration certificates of various medical devices and 24 patent certificates. In 2021, Ping An medical equipment achieved a revenue of 360 million yuan and a net profit of 850326 million yuan. Its business covers China and overseas markets, mainly sales in China, and has a leading position in the market share of hospitals in Hunan Province.
The synergy effect of M & A is obvious, and the two sides strengthen category, channel and operation cooperation. 1) In terms of categories, injection puncture is the largest category in China’s low-value medical consumables market. According to the research of IBM and medical equipment exchange, the market scale of China’s low-value medical consumables will reach 221.3 billion yuan in 2025, of which injection puncture products account for 28%. After the acquisition, the company will fill the blank of products in this field. 2) In terms of channels, Ping An medical equipment has a leading market share in hospitals in Hunan Province. The company has established a perfect national hospital network, serving more than 4000 hospitals and 120000 pharmacies, covering more than 110 countries overseas and a large number of high-quality customers in Europe, America and Japan. The brand reputation continues to improve. After cooperation, the two sides will share channel resources and jointly provide one-stop customized solutions for hospitals and other customers with the original medical dressing products to promote revenue growth. 3) In terms of operation, the company has more than 30 years of experience in the production and quality management of medical consumables, and has built an industry-leading intelligent manufacturing system, digital operation system, digital procurement and supply chain management system, digital warehousing and logistics delivery system. After the acquisition, the company will enable Ping’an medical equipment and improve the operation capacity of the industrial chain.
Profit forecast and investment rating: we maintain the EPS forecast of 202224 at 3.35/4.23/5.12 yuan. At present, the stock price corresponds to 18.07 times PE in 22 years, and the valuation is at a low level. The company’s medical M & A projects have been implemented rapidly, strengthened collaborative and competitive advantages, and expanded revenue and performance scale. We believe that the performance disturbance caused by covid-19 epidemic has gradually ended, the company’s performance is expected to resume growth after 2022q2, with large long-term development space, and maintain the “buy” rating.
Risk factors: reduced demand for downstream epidemic prevention supplies, rising prices of raw materials, increased losses from exchange rate fluctuations, intensified industry competition, etc.
