Events:
The company recently released a major asset purchase report, which intends to purchase its 90% stake in Tianshili in Liaoning and 60% in Pingjia in Jinan from Tianjin Tianshili in cash, as well as its 10% stake in Tianshili in Liaoning Province from Li Shanshan. After the completion of this transaction, the company will hold 100% of Tianshili in Liaoning and 60% of Pingjia in Jinan.
M & A price and valuation: this transaction buys 100% equity of Tianshili in Liaoning and 60% of Pingjia in Jinan at a price of 714.8604 million yuan. The valuation of the acquisition is: Liaoning Tianshili / Jinan Pingjia PE on March 31, 2023 is 39.06 shock 19.45 and PS is 0.80 and 0.87.
Thicken the leading advantage of Shandong market and realize the regional scale effect of Liaoning. Jinan Pingjia main sales area in Jinan, Shandong Province, with 132 direct stores, the sales scale ranks among the top three of Jinan pharmaceutical retail industry, the region has high awareness and brand recognition. 2023Q1's revenue is 73.7163 million yuan and its net profit is 3.3095 million yuan. After the acquisition of the target, the company can deepen its leading advantage in Shandong Province, greatly open its competitive position with other pharmaceutical retail chain enterprises in Shandong Province, increase its market share and consolidate its position. Liaoning Tianshili mainly sells in Liaoning and Tianjin, with 424 direct stores, covering Shenyang, Benxi, Dandong, Anshan, Fushun, Dalian, Fuxin, Jinzhou, Tieling and other cities in Liaoning Province, as well as Tianjin. It is the forefront pharmaceutical retail chain in Liaoning Province. 2023Q1's revenue is 176.16 million yuan and its net profit is 3.5863 million yuan. The company's foundation in Liaoning Province is relatively weak, and the acquisition of this target will help the company to encrypt the layout of key provinces, improve brand influence and achieve economies of scale.
Acquisition of high-quality targets to increase market share, adhere to the key layout to achieve business coordination. Shu Yu civilians adhere to the strategic goal of "deeply ploughing the Shandong market, choosing opportunities to expand outside the province, and moving towards the whole country". In recent years, they have continued to optimize their business and refine their operation capacity. As of 2023H1, the company has 3868 stores, including 3464 in Shandong Province and 151in Liaoning Province. After the completion of the acquisition, the number of the company's stores will increase to 4424, and a breakthrough of 0 will be completed in Tianjin. Through mergers and acquisitions, the number of direct stores and the scale of the main business will be further expanded, the market share and comprehensive competitiveness will be significantly increased, the upstream bargaining power will be enhanced, more supply chain resources will be obtained, and the direct business will nurture and join the business. achieve economies of scale and business coordinated development. At the same time, this horizontal M & A focuses on the pharmaceutical retail field, which will help the company to enhance its market share and industry position in the main business areas, and improve the company's revenue level by increasing the size of stores.
Profit forecast and investment suggestion: it is estimated that the company's income in 2023-2025 will be RMB 126.76pm 15.875 billion, and the net profit attributable to the parent will be RMB 2.7410 million, corresponding to 1.11 yuan per share of earnings per share, corresponding to PE of 28-21-17, and maintain the "overweight" rating with reference to the valuation of the same industry.
Risk hint: the market competition aggravates the risk, the acquisition is not as expected, and the human capital dilution risk.