Event: the company announced on December 2 that it intends to invest 307.3 million yuan to buy 86% of the equity of Jiangsu Chengxin Pharmaceutical Co., Ltd.
The basic situation of the transaction: honesty Pharmaceutical is a high-tech enterprise dominated by biological enzyme technology and combined with chemical synthesis technology, which mainly produces pharmaceutical raw materials, cosmetics and dietary supplementary raw materials, and has rich enzyme library resources. At present, it is mainly engaged in three raw materials: praziquantel, oxiracetam and β-nicotinamide mononucleotides, and alanyl-glutamine will be put into production soon. The company's products have passed WHO World Health Organization (WHO), European Union EDQM (CEP), American FDA registration and Japanese pharmaceutical foreign manufacturer certification. In terms of valuation, Integrity Pharmaceutical has a total asset book value of 337.4696 million yuan, a total liability book value of 213.9584 million yuan and a net asset book value of 123.5112 million yuan on the base day. Under the assumption of continuous operation, the income method is used to evaluate the total equity value of shareholders of 360 million yuan, value-added 236.4888 million yuan, value-added rate 191.47%.
The main purpose of this transaction is to expand the company's layout in the raw material industry and to coordinate the development of enzyme-catalyzed green technology. After the completion of this transaction, the existing business of Integrity Pharmaceutical will expand the company's layout in the raw material industry. at the same time, the company can make use of its existing enzyme technology platform to develop enzyme catalytic green technology and form a collaborative relationship with the company's business system. to provide the company with more innovative, cost-effective and green process technology to enhance the comprehensive competitiveness of its products. Accelerate the company to achieve the strategic development goal of the big health field, create greater value for shareholders, in line with the company's medium-and long-term development strategy.
After the completion of the transaction, Integrity Pharmaceutical will be included in the consolidated statement as a holding subsidiary of the company, which will not have a significant impact on the company's business performance in 2020, but will have a positive impact on the company's future business development and business performance improvement. Financial data show that as of August 31, 2020, Integrity Pharmaceutical had total assets of 337 million yuan and net assets of 124 million yuan. In 2019 and the first eight months of 2020, the operating income was 98.3315 million yuan and 117 million yuan respectively, and the net profit was-46.643 million yuan and 1331.16 million yuan respectively.
Investment suggestion: Jindawei is one of the major global vitamin A suppliers, coenzyme Q10 market share is expected to be more than 60%, health products have the whole industry chain, the strategy is optimistic about the development of NMN, the company will continue the dual main business model of "manufacturing + brand operation" in the future. It is estimated that the company's EPS from 2020 to 2022 will be 1.95,2.31,2.77 yuan, corresponding to PE 18.1,15.3 and 12.7 times, respectively, maintaining a "highly recommended" rating.
Risk tips: market expansion is less than expected, downstream demand is lower than expected, product prices fall sharply, raw material prices fluctuate sharply, the risk of environmental protection, the risk of production safety. NMN products account for a very low proportion of the company's sales and do not have a significant impact on the company's current performance. The effectiveness of the company's NMN products has not been evaluated by FDA and is not used to diagnose, treat, cure or prevent any disease.