It is proposed to issue shares and raise supporting funds to purchase 100% of Alfa Pharmaceutical's shares
The company announced that it will issue shares and pay cash to purchase assets and raise supporting capital and related transaction plans: it intends to purchase 100% of Alpha Pharmaceutical's shares and 100% of Alpha Pharmaceutical's shares will be priced at 1,122 million yuan through issuing shares and paying cash, of which no more than 30.2 million shares (2,067 yuan/share) will be issued to specific targets such as Shi Zhenxiang, the former shareholder of Alpha Pharmaceutical, and others, totaling 624 million yuan to pay 55.64% of the transaction price; at the same time, it plans to raise supporting capital to specific targets. The company plans to issue shares to no more than 10 specific targets, including Nantong Holdings. The shares raised supporting capital, with no more than 37.31 million shares (2,144 yuan/share) totaling 800 million yuan, of which 498 million yuan paid the remaining 44.36% of Alpha Pharmaceutical's transaction consideration, and the remaining 302 million yuan after deducting various expenses was used for the “technological transformation project that produced 2,100 tons of chondromes and intermediates and 3,500 tons of by-products per year”.
Alpha is a leading pharmaceutical intermediate company for atorvastatin calcium and rostuvastatin calcium
Alpha Pharmaceutical specializes in pharmaceutical intermediates. Its main products are key intermediates for important cardiovascular drugs such as atorvastatin calcium and rosevastatin calcium. It has scale advantages and process advantages in the industry, and also occupies a leading position in the domestic and international markets. Foreign countries mainly target the Indian, European and Southeast Asian markets. Long-term customers include India's Baikang, Israel's Teva, Novartis, etc., and has also entered leading domestic statin preparation companies in batches. The company's 2015 revenue was 457 million yuan and net profit was 53.359 million yuan. At the same time, it promised that net profit for 2016, 2017, and 2018 would not be less than 70.5 million yuan, 97 million yuan, and 131 million yuan respectively. The total net profit achieved during the three-year assessment period was no less than 298.5 million yuan, which is expected to increase profits significantly.
The company's pharmaceutical intermediates and APIs business is improving
The company adheres to the “one master, two wings” development strategy and continuously improves its business layout. While strengthening the dominant position of traditional Chinese medicine passed down from generation to generation, develop and expand the “two wings” of characteristic APIs, pharmaceutical intermediates, and novel chemical preparations. Through the acquisition of Alfa Pharmaceutical, the expansion of intermediates and APIs “One Wing” will be greatly improved. The company quickly entered the core industrial chain of atorvastatin calcium and rosevastatin calcium APIs, which can significantly increase the business revenue of the intermediates and APIs sector and enrich the variety structure. Through this, the company has also stocked up a number of industrialization technologies for APIs and their key intermediates (including chiral drugs and intermediates), accumulating potential for breaking through the downstream formulation industry chain.
The company's annual performance is expected to continue its high growth trend
The company's main traditional Chinese medicine formulations are expected to continue their good trend and are expected to grow by more than 30% throughout the year. Sulfur-free Chinese medicine tablets are expected to generate a small profit this year, and Dongli's corporate management, which is listed, is expected to continue to successfully fulfill its performance promises, driving the company's overall performance to double throughout the year.
Optimistic about advancing the company's strategy and maintaining the “buy” rating
The company has initially formed three major sectors: proprietary Chinese medicine preparations and Chinese medicine tablets, chemical raw materials and pharmaceutical intermediates, biopharmaceuticals, and research and development, and there are expectations of continued outreach. We are optimistic about the company's long-term development. Excluding Alfa Pharmaceutical, the 2016-2018 EPS is expected to be 0.42, 0.54, and 0.67 yuan respectively, and the corresponding PE is 61, 48, and 38 times, respectively, maintaining the company's “purchase rating”.
Risk warning: The progress of mergers and acquisitions and the results of integration have fallen short of expectations.