Core viewpoints

The company acquired a 51% stake in Qingdao Runbote Biotechnology Co., Ltd., and became its controlling shareholder. Runbote is an early manufacturer engaged in the production of green non-resistant feed additives, has rich R & D strength and experience, and is committed to the R & D and sales of animal feed animal protection products. In recent years, the company continues to increase the size of food probiotics and other new areas, tap the potential of the new track, the equity acquisition of Runbote will further consolidate and improve the company's product matrix, provide customers with systematic solutions, and increase market share. Looking to the future, the coordinated development of the two is expected to achieve greater market value and promote better performance.

Event

On July 20, the company and Qin Wei, Qin Qilong, Zhang Xiaodong, Chen Qiang, Qingdao Julun Management Consulting Partnership (Limited Partnership), Qingdao Grunpu Management Consulting Partnership (Limited Partnership) and Qingdao Runbote Biotechnology Co., Ltd. signed the Equity transfer Agreement of Qingdao Runbo Biotechnology Co., Ltd. With its own capital of 91.8 million yuan, it acquired a 51% stake in Qingdao Runbote Biotechnology Co., Ltd.

Brief comment

1. Runbote takes root in biological agents, focuses on the production of feed additives, and has strong profitability. Runbote is an early manufacturer engaged in the production of green non-resistant feed additives in China, with the preparation process as the core technology. developed coated tannic acid preparation, coated butyric acid preparation, coated plant essential oil preparation, and ruminant used rumen choline, rumen methionine and other products. The market covers more than 30 provinces and cities across the country, and has successfully opened up overseas markets such as the European Union, Southeast Asia, South Asia, the Middle East, North Africa, South America and Russia. From January to May in 2022 and 2023, the revenue of Runbo is 9715.34 yuan and 35.816 million yuan respectively, the net profit is 1490.53 yuan and 9.4687 million yuan respectively, and the gross profit margin is 35.58% and 49.41% respectively.

2. Runbo attaches equal importance to special products, learning and research, and has strong scientific research strength.

Runbote has established a strong R & D team. The R & D expenditure from January to May in 2022 and 2023 is 7.0654 million yuan and 1.8341 million yuan respectively, accounting for 7.27% and 5.12% of revenue respectively. Runbote has feed additive production license (third line) and premixed feed production license, runs ISO9001 international management system, and has obtained EU FAMI-QS certification and Holland GMP+ certification. Runbote attaches great importance to industry-university-research and has long-term cooperation with well-known scientific research institutions such as Ocean University of China, Zhejiang University, Zhejiang Agricultural University, Shandong Agricultural University, Qingdao Agricultural University, Qingdao University, Huanghai Fisheries Research Institute and so on. Efforts should be made to improve the enterprise's ability of independent innovation and provide impetus for the company's development.

3. The company and Runbote are expected to achieve complementary advantages in multiple scenarios, which is expected to greatly enhance the market competitiveness. Runbote has a rich background in antibiotic substitution, especially in the research of tannic acid. it can complement the enzyme preparation, probiotics and Chinese herbal medicine of azure organisms, form a complete system of antibiotic substitution, effectively improve the large health system of azure organisms, and provide customers with system solutions. A richer product matrix will greatly enhance the company's market competitiveness. In addition, Azure Bio and a number of international leading enterprises to carry out R & D cooperation, Runbote can share the company's platform resources, the coordinated development of both sides is expected to produce greater market value.

4. Profit forecast and rating: the company's acquisition of 51% of Runbote's equity will help to make full use of its advantages in biological agents and further enrich the product matrix. Under the background of comprehensive replacement, tannic acid and other products are expected to usher in better development. Continuous improvement of animal health system, to provide customers with system solutions to promote market competitiveness and market share. It is estimated that from 2023 to 2025, the company will achieve operating income of 1.284 million yuan, net profit of 1.055 and 1.42 million, EPS of 0.42, 0.56 and 0.72 respectively, and PE of 31.36x/23.19x/18.04x, respectively, maintaining the "overweight" rating.