Matters
The company announced that it intends to purchase 100% of the shares of Changbaishan Huangfeng Participation Co., Ltd. through a combination of issuing shares and paying cash. Of these, 75.58% of the transaction consideration was paid by issuing shares, with an amount of 27,58792 million yuan, corresponding to the issuance of 19,131,696 shares, with an issue price of 14.42 yuan/share; the remaining 24.42% of the cash is to be raised by issuing shares to no more than 10 other specific investors (the issue price is 12.98 yuan/share, corresponding to no more than 8,089,368 shares, and the total supporting capital does not exceed 105 million yuan). The estimated 100% equity value of Huangfeng Industrial, which is the subject of this acquisition, is 365 million yuan. The total number of shares to be issued is estimated to be no more than 27,221,064 shares.
Key Views
(1) With the acquisition of Huangfeng for 365 million yuan to enter the business, the development of the ginseng business sector will accelerate. Huangfeng Industrial was founded in December 2009, with ginseng as the core of business development. Its main business is ginseng cultivation, R&D, production and sales of ginseng tablets, ginseng food, health products, and cosmetics. The product categories include three aspects, including red ginseng, deep-processed ginseng products, and ginseng cosmetics. The target business of the acquisition fits the company's ginseng sector development strategy and makes up for the company's shortcomings downstream in the industrial chain. By absorbing and integrating Huangfeng into the business, the company will become a full-spectrum ginseng industry chain company in the ginseng industry, from planting to processing, from tablets to cosmetics, health products, and food. The ginseng business segment is expected to be the core contributor to the company's profit over the next 3 years.
(2) “Forest ginseng+non-forest ginseng” takes a two-pronged approach, and the performance of the target of the acquisition promises to guarantee profits. As one of the leading enterprises in the ginseng industry, Huangfeng Shenye has deep traditional cultural connotations and brand advantages. It is mainly a woodland ginseng cultivation model. Currently, it has a ginseng planting base of about 1,000 acres. Since 2010, Jilin Province has controlled the net increase in the area of harvested land used to grow ginseng to less than 1,000 hectares each year: 1) The company relies on its own advantages and will receive some support from the government in the forestry ginseng planting plan in the future, 2) At the same time, fully relying on Yisheng Pharmaceutical's successful experience and technology of non-woodland ginseng cultivation, avoiding the policy risks of woodland cultivation, and the double guarantee of woodland cultivation and non-woodland cultivation to provide raw materials.
As a major shareholder holding 40% of Huangfeng's shares, China Corfu promised that Huangfeng's net profit attributable to owners of the parent company in 2014, 2015, and 2016 would not be less than 23 million yuan, 27 million yuan, and 32 million yuan. After the share exchange, China Corfu held 10.12 million shares of listed companies, which were highly consistent with the interests of listed companies, and promised that performance would be fully guaranteed. (3) Non-woodland ginseng cultivation techniques have been verified, and participating in the bee industry has built a big health industry. The company harvested 147 mu of its first batch of non-woodland ginseng last year, with a total output of 96 tons, with an average yield of about 653 kilograms per mu. It is expected that the ginseng harvest area will continue to increase this year, and the company's non-woodland ginseng cultivation techniques will be tested. Furthermore, the company continues to increase its promotion efforts for major health industries such as participation in the industry and the beekeeping industry to create new growth points.
(4) Investment advice: “recommendation”. The company opened up the ginseng industry chain through the acquisition of Huangfeng Ginseng Industry. At the same time, the company has mastered the core technology of non-woodland ginseng cultivation. The continuous recovery in ginseng prices highlights the strategic advantages of non-woodland ginseng cultivation, and lays out the entire ginseng industry chain. The market space is huge. The “bee industry+participation” provides the company with broad development space. Give a “Recommended” rating.