Hainan Haiyao (000566.CH/RMB 13.56, purchase) recently announced an offer report. The actual controller, Liu Xicheng, plans to make an offer to acquire 134 million shares of tradable stock companies with unlimited sales conditions other than those held by Southern Tongzheng through Juli Trust No. 36, accounting for 10% of the company's total share capital. The offer price is 14.5 yuan/share. The maximum purchase capital required is 1,937 million yuan. The tender is valid from May 4, 2017 to June 2, 2017 (all including the same day). The offer is valid from May 4, 2017 to June 2, 2017 (all including the same day). After the acquisition was completed, Liu Xicheng directly and indirectly held up to 44.08% of Hainan Haiyao's shares in total.
Key points of support ratings
A premium offer for acquisition, and the majority shareholders are firmly optimistic about the company's development
This time, the majority shareholder bought at a 7% premium compared to the current price, and offered to buy 134 million shares, which can be seen as a powerful increase in holdings. After the acquisition was completed, the majority shareholders held a total of 44.08% of the company's shares, further consolidating the controlling position and favoring the stable development of listed companies. Previously, in the fixed increase completed in September 2016, the majority shareholders subscribed at 1,223 yuan/share, totaling 1.6 billion yuan, at a high percentage (54.23%). The high percentage of participation in fixed increases and premium takeovers shows that the majority shareholders are strongly optimistic about the company's future development and are full of confidence.
Analysis of opportunities for this tender offer
As of May 3, 2017, excluding the majority shareholders' holders' holdings and the six fixed increase unit restricted shares, the shares participating in this tender offer were 999 million shares (all tradable shares) - 224 million shares (majority shareholders' tradable shares) = 765 million shares. The limit assumes that all 765 million shares apply to participate in the offer, which means that the shareholders will have 134 million shares/765 million shares = 17.51% of the shares to be purchased at the current price of 13.53 yuan at the closing price on May 3., The break-even stock price is 13.53-17.51% * (14.5-13.53)/82.49% = 13.31 yuan. In other words, even if tradable shares are offered, the stock price does not fall below 13.31 yuan, and there is no loss when bought at the current price.
The company is deeply involved in the health industry and actively creates a “drug-medical-device” multi-core driver
The company is actively promoting the construction of the three “pharmaceutical-medical-equipment” sectors: it has successively participated in Chongqing Yade and Jin Shengda, established Haiyao Health Management Company, built an Internet medical platform and a big health management platform to lay out grass-roots telemedicine according to the trend of hierarchical diagnosis and treatment; speeding up the layout of medical service fields, actively participating in the restructuring of public hospitals, and accumulating physical medical resources; in terms of research project reserves, the company is currently focusing on research and development of neurological products, anti-tumors, cardiovascular products, digestive system products, antibiotics (cephalin, pyrethrin products), etc. Among them, monoclonal antibody product rheumatoid arthritis indications have completed phase II clinical trials, and phase III clinical trials are about to begin; the new compound MDM2 inhibitor, which treats tumors, has applied for US patents and PCT patents, and preclinical research is being carried out simultaneously in China and the US; it has obtained 3 clinical approvals for the chemical drug class 1.1 fluorfenidone, the chemical class 3.1 doripenem, the chemical drug class 3.1 teripenem, etc.; the company's current second-generation cochlear implant clinical trial is in the clinical trial stage and is expected to be marketed by the end of this year.
Ratings face major risks. The pace of new drug development falls short of expectations; bid price cuts have exceeded expectations; policy impact.
investment strategy
We expect diluted earnings per share to be 0.13 yuan and 0.15 yuan respectively in 17-18. The current stock price corresponds to price-earnings ratios of 104 and 90.2 times. The company is actively building the three “pharmaceutical-medical-equipment” sectors and deepening the health industry; there is no shortage of major varieties being developed by the company, and we are optimistic about the company's long-term development. Looking at the short-term game level, the company's current stock price is 13.53 yuan/share. Compared with the majority shareholder's additional price premium of 10%, the offer price is 7% off, and safety is high. We maintain our buy rating.