Incident: The non-public offering of no more than 50 million shares raised 1.5 billion yuan to acquire 100% of Collison's shares valued at 1.1 billion yuan held by Rongyuan Ruikang, and another 400 million to supplement Collison's working capital and repay bank loans.
Reviews:
1) The acquisition of Collison achieved a strong partnership in cell therapy, and the hospital's sales channels were greatly expanded. Collison is one of the leading companies in traditional CIK and NK cell therapy in China. Using a wide range of channel resources, Collison currently provides long-term cellular immunotherapy technology services to more than 30 hospitals in China. The scale of business has continued to rise in the past three years, achieving revenue and net profit of 296 million and 40 million respectively in 2015. It is expected that a good growth rate will be maintained in 2016. Currently, the listed company's cell business includes stem cell cryopreservation, development of stem cell therapy techniques and formulations, and research and development of products and technologies related to cellular immunotherapy, but they have not invested much resources to develop the hospital clinical sales market, and this acquisition by Collison has put the company in one step in terms of channel resources.
2) The listed company will bring three resources to Collison to help it develop healthily and rapidly. When Collison moved from a former industrial shareholder to the M&A fund Rongyuan Ruikang earlier, the listed company had already begun to anticipate connecting with some resources, such as strengthening management and helping it expand channels for five hospitals in half a year. Officially included as a listed company, the company will help its rapid development from the following aspects: a. Technical input. Collison's current main technology is traditional CIK and NK cell therapy technology. Listed companies have the current advanced Car-T, PD-1 and other technology tumor immune cell technology, which will be gradually imported later; b. Hospital channel expansion and management standardization. The company has been deeply involved in cell storage and has long-term partnerships with many domestic tertiary hospitals. Hospital resources can be quickly transferred to Collison to drive rapid growth in its performance; c. Financial support, this non-public development will have Supplementing Collison's working capital with 400 million dollars and repaying bank loans will enable Collison to lift the burden of debt and use the attributes of listed companies' financing platforms to mobilize more capital to develop more hospital treatment centers.
Valuation rating: As a leading precision medicine enterprise in China, the company is the only cell-and gene-driven dual-core company in the market. It has a complete upstream, middle, and downstream stem cell layout, and continues to expand the genetic field. Expectations of extension are strong. Excluding extension, we expect the EPS for 15-17 to be 0.53, 0.53, and 0.70 yuan, respectively, and the corresponding PE to be 75 times, 76 times, and 57 times, maintaining the stock increase rating.
Risk warning: Stem cell policy uncertainty, new drug approval risks, delays falling short of expectations, etc.