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八菱科技(002592):拟增资云南工业大麻公司 公司大健康业务再拓展

Baling Technology (002592): Plans to increase capital to Yunnan Industrial Hemp Company to further expand the health business

天風證券 ·  Apr 21, 2019 00:00  · Researches

Incident: The company issued an announcement to increase the capital of Dayao Mawang Kehua Biotechnology Co., Ltd. by RMB 66 million. After completion, Baling Technology accounted for 22% of Kehua Biotech's registered capital after the capital increase. Kehua Biotech is a technology company focusing on biomedical research, processing, and extraction of industrial hemp.

Comment:

With the rise of the industrial hemp industry, companies have followed suit. The tetrahydrocannabinol content of industrial hemp is less than 0.3%, and it has no drug use value. It is widely used in industries such as paper, textiles, building materials, industrial oil, health food, cosmetics, pharmaceuticals, etc., and is a new characteristic biological industry that has been very competitive in recent years. The target company the company plans to invest in is Dayao Mawang Kehua Biotechnology Co., Ltd., and Kehua Biotech's hemp layout is progressing steadily: ① In terms of production qualifications, Kehua Biotech signed the “Industrial Hemp Processing High-tech Industrial Park Base Construction Project Framework Agreement” with the Dayao County People's Government on August 13, 2018. The project has been initially approved by the Public Security Bureau of Dayao County, Yunnan Province. ② In terms of plant construction, the main construction of the Kehua Biological Plant has been completed, and the small and pilot tests of products have been completed. It is planned to produce 2 tons of products such as cannabidiol and full-spectrum oil this year, and all production will be achieved in 2020 (the project design production capacity is 15 tons). ③ In terms of raw material supply, Kehua Biotech has signed a procurement contract with Binchuan Relink, which has an industrial hemp cultivation license. At the same time, Yunnan Amakusa and Yunnan Ma Wang, controlled by the same actual controller, plan to cultivate a total of 9,000 mu of industrial hemp in 2019, providing a guarantee for sufficient supply of raw materials.

Aiming at big health, the layout promotes business collaboration. The company plans to use no more than 1.8 billion yuan to acquire 51% of Hongrun Tianyuan's shares. Hongrun Tianyuan is committed to cell technology research and development, clinical transformation research, and health management services. If the acquisition is successful, we expect the company to increase net profit of at least 130, 170 million yuan, and 200 million yuan in 2019-2021. Cannabidiol, an extract of industrial hemp, has effects such as relieving pain, inflammation, and anti-anxiety. If China further liberalizes the application of industrial hemp in medicine and food in the future (not currently liberalized), then the company's industrial hemp business is expected to generate business synergies with Hongrun Tianyuan, which is also positioned as a health business.

Auto parts are following the wave of new energy, and the attendance rate for live shows continues to rise. The company is currently one of the largest automotive radiator suppliers in China. 2018H1's auto parts business (including radiators, intercoolers, oil coolers, condensers, bumpers, etc.) achieved revenue of 340 million yuan, with a revenue contribution of 92.0%. The cultural performing arts business “The Dinosaurs Who Went Away” was officially performed in May 2018. The number of viewers exceeded 10,000 in June, and the annual revenue is expected to reach 240 million yuan.

Investment advice: The company is expected to form a troika driven pattern. The automotive sector is expected to become a new growth point along with new energy products; the “Dinosaurs Gone Away” project can be expected to be profitable; the biological business, which mainly focuses on stem cells and industrial hemp, is well laid out. Without taking into account the performance contributions of Hongrun Tianyuan and Kehua Biotech, we expect net profit to return to the mother in 18-20 to 19 million, 61 million yuan, and 115 million yuan respectively. Maintain an “increase in holdings” rating.

Risk warning: Competition in the heat exchanger market intensifies; the risk that Hongrun Tianyuan's merger and acquisition of China Bank will not be able to reach a formal agreement in the future, the risk that the framework agreement and related transactions will not be reviewed by the shareholders' meeting; the risk of Kehua Biotech's cannabis processing license cannot be obtained; industrial hemp related business may include the risk of changes in market demand, the risk of policy changes, management risks, natural risks, R&D operation risks; industrial hemp and marijuana drugs should be strictly distinguished, and the drug marijuana is very harmful; China has not yet approved industrial hemp for medical use and food addition

The translation is provided by third-party software.


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