Event: Zhou Xuzhou, executive director of Meirui Health International, increased his holdings of the company's shares on April 26, May 17, May 20, and June 4 this year, and the latest shareholding ratio reached 50.32%.
Share price is low, executive director Zhou Xuzhou continues to increase his holdings to show confidence
According to information disclosed by the Hong Kong Stock Exchange, Zhou Xuzhou, executive director of Midea Health International, increased his holdings of the company's shares on April 26, May 17, May 20 and June 4 this year, reaching 43.002 million shares, 3 million shares, 4.5 million shares and 6.6 million shares, respectively. Among them, the capital involved was increased by about HK $39.1318 million on April 26. After the completion of the increase on June 4, Zhou Xuzhou's latest shareholding reached 50.32%. Recently, due to the weakening attention of the industrial marijuana plate, the company's share price fell and continued to increase its holdings in the process of decline, highlighting the firm confidence of the company's major shareholders in the future development of the company. In addition, considering that before the fixed increase this year, the company's major shareholders accounted for more than 53% of the issued voting shares (the proportion of major shareholders has been more than 53% since the second half of 2018), there is a potential for major shareholders to continue to increase their holdings in the future.
Processing and extraction end: Meirui Health International maintains the leading position with Han Su.
Industrial hemp extract CBD does not have the characteristics of drugs, has the efficacy of treating epilepsy and other diseases, and can be used in food and cosmetics. Meirui Health International maintains a domestic leading level in industrial hemp processing and extraction: the company holds a 20% stake in Yunnan Hansu, which has China's first hemp processing license that meets GMP standards, and is one of the largest extraction bases for monomer cannabis diphenols and other cannabis phenols in China. In 2018, the company made a profit of HK $11.5 million through its shareholding in Yunnan Hansu. In addition, the company signed an agreement with Hanma Group to jointly invest in the US industrial hemp extraction plant and is expected to become the controlling shareholder of Hansel Phase II expansion project, expanding processing and extraction capacity on the basis of existing production capacity.
Product application: the United States and Switzerland Health International relies on overseas advantages to unite.
Meirui Health Group and GMP Group, a well-known Australian pharmaceutical group, signed a memorandum of strategic cooperation, agreeing to set up a joint venture in Australia to engage in the research, development, production and sales of marijuana health consumer goods (CBD related products). GMP Pharmaceutical Group specializes in the research, development, production and sales of pharmaceuticals, health products, dairy products and special natural skin care products, and its Australian plants serve many customers in more than 30 countries around the world. The company already has an industrial layout in Australia, and its health real estate project is located in the Alphington area on the outskirts of Melbourne, Australia, and has innovatively developed a high-end medical floor project, which makes the company more familiar with the local situation. We believe that the company's existing business in Australia lays the foundation for the company's later new business operations, and GMP's experience in pharmaceuticals and health products will help the company to further develop cannabinoid-related health products and actively move into the industrial cannabis application market.
Profit forecast and investment suggestion
For the company's existing business, we expect its operating income from 2019 to 2021 to be HK $2.24,2.45 and HK $266 million, and its net profit to HK $1.03,1.26 and HK $147 million. The new business of industrial marijuana is expected to bring new performance increments for the company. In view of the stability of the company's traditional business, the industrial marijuana business has a solid layout and rapid expansion, maintaining a "buy" rating.
Risk hints: industrial marijuana should be strictly distinguished from intermediate marijuana and recreational marijuana / drug marijuana; resolutely oppose the legalization of recreational marijuana; industrial marijuana-related business may contain policy change risks, R & D operational risks, and cooperation uncertainties; specific implementation progress and results are uncertain At present, China has never approved industrial marijuana for medical use and food addition, and the actual cooperation between the two sides still needs to obtain a series of licenses, permits or approvals from the relevant regulatory authorities.