Merger and acquisition of Jilin Jinbao Pharmaceutical Co., Ltd.: Ssangyong and its wholly-owned subsidiary Wanzai Ssangyong plan to buy 100% of Jinbao Pharmaceutical shares by issuing shares and paying cash, with an estimated value of 1.0934409 billion yuan and a value-added rate of 67.16%. At the same time, Ssangyong shares plan to issue a total of 22022641 shares to Lu Zhongkui, a specific target, and raise 163.408 million yuan in matching funds to pay cash consideration and related fees. The issue price is 7.42 yuan per share in the 20 trading days before the pricing benchmark. After the completion of the transaction, the total share capital of Ssangyong shares increased to about 284.014 million yuan, Lu Zhongkui and his wife held 26.455%, Jinbao pharmaceutical controller Sun Jun held 14.152%, the actual controller remained unchanged, belonging to a major asset restructuring.
Jinbao Pharmaceutical Co., Ltd. is profitable and will significantly improve the company's profits: according to the results of the 2013 audit, Jinbao Pharmaceutical achieved an operating income of 368.4823 million yuan and a net profit of 96.7502 million yuan. In addition, Jinbao Pharmaceutical shareholders promised that Jinbao Pharmaceutical's audited net profit after tax in 2014,2015 and 2016 would not be less than 82 million yuan, 101 million yuan and 118 million yuan respectively. The above net profit is calculated on the basis of net profit after deducting non-recurrent profit and loss, and the performance commitment is higher than that of the last draft. The net profit of Ssangyong's chemical business in 2013 is only 27.16 million yuan, and mergers and acquisitions will significantly improve profitability. Jinbao Pharmaceutical Co., Ltd. was founded in 1998, and its main business is R & D, production and sales of proprietary Chinese medicine. At present, it has 66 drug production approval numbers, of which 35 products are listed in the national health insurance catalogue. It is a proprietary Chinese medicine R & D, production and sales enterprise with good development prospects, high-quality customer base and advanced technical strength. Among the products, 35 varieties are listed in the National essential drugs catalogue, and 31 drugs are listed in the OTC variety catalogue (including 23 Class A varieties and 8 Class B varieties).
Investment advice: we expect diluted earnings per share from 2014 to 2016 to be 0.31 yuan, 0.50 yuan and 0.58 yuan respectively. Chemical and pharmaceutical two-wheel drive have maintained rapid growth in the past two years. To maintain the investment rating of overweight-A, the 6-month target price is 13.5 yuan, equivalent to 27 times the dynamic P / E ratio in 2015.
Risk Tip: the risk of mergers and acquisitions not approved by regulators