The transfer of Kirifu shares was finally completed. On December 29, 2023, the majority shareholder of Shanghai Rice Grifols, S.A. (Kirifu) and Haier Group signed a “Strategic Cooperation and Share Purchase Agreement”. Haier Group or its designated related parties intend to agree to acquire 1,329 billion shares of the company held by Kirriff (accounting for 20.00% of the company's total share capital). At the same time, the transfer price is 12.5 billion yuan, with a premium rate of about 17.5%; at the same time, Kirriff's remaining 437 million shares of the company's shares (accounting for about 17.5% of the company's total share capital) Ben's 6.58%) The corresponding voting rights are delegated to Haier Group or its designated related party. Furthermore, Kirriff and Shanghai Laishi have reached an exclusive cooperation and strategic partnership on related business. Trading shares may not be sold, transferred or otherwise disposed of to any third party (other than related parties) within three years after delivery.

After this change in equity, Haier Group will be the corporate shareholder holding the most shares in Shanghai Rice and will become the new actual controller of the company.

With a deep long-term partnership with Kirriff agents, the scope of cooperation is expected to extend to the fields of bioscience and diagnosis

In January 2021, Shanghai Race signed an “Exclusive Agency Agreement” with Kirriff to act as an exclusive dealer to sell Kirriff International's human blood albumin, albumin, and plasma protein products. In addition, Shanghai Rice's subsidiary Tonglu Pharmaceutical was also authorized by GDS to exclusively sell products such as blood screening systems, blood screening test reagents, and blood screening kit products. After the transfer of shares between Haier Group and Kirriff, Kirriff should sign a revised agreement to revise the exclusive agency agreement for albumin, revise the term of the existing exclusive agency agreement for albumin to ten years, take effect from the date of delivery, and grant Shanghai Rice the right to renew the agreement for another ten years. At the same time, Kirriff undertakes that, in addition to the products covered by the current exclusive albumin agency agreement, if Kirlif or its affiliates plan to promote, sell or distribute in the Chinese market any blood product in the field of bioscience and diagnosis (referring to the following fields: (i) blood collection for transfusion; (ii) collection of plasma to be processed; (iii) production and commercialization of plasma protein preparations; (iv) testing of blood and plasma for use; and (v) immunohematology and any other diagnostic business, “bioscience and diagnosis”) Shanghai Laishi is right Priority quotation rights for the exclusive distribution of blood products from Kiriflu or related parties in China.

As a result of the above agreement, Shanghai Laishi obtained an extension of exclusive agency rights for albumin products for at least 10 years, and blood products in the field of bioscience and diagnosis have priority quotation rights exclusively distributed in China, making the company's albumin agency business more stable, and the areas of cooperation are expected to expand, and the agency business is expected to develop steadily and rapidly.

Haier has significant resource advantages in Shandong and the country, enabling the company to grow in the medium to long term as one of the top 100 enterprises in Shandong, actively building an open venture capital platform. It has successively established a number of listed companies such as Haier Smart Home (the second A-share listed company in Shandong Province), Haier Biotech (the second company listed on the Science and Technology Innovation Board in Shandong Province), and Yingkang Life (Haier Group's major health ecosystem important brand), and merged the Hong Kong stock listed company Haier Electric in 2020 to first establish an “A+D+H” global capital market layout.

As one of the leading enterprises in Shandong Province, Haier Group has an important commercial position in Shandong Province. In recent years, Haier Group has thoroughly laid out a big health circuit, implemented full-process IoT informatization management in all aspects of pulping, pulp storage, preparation, cold chain and clinical trials, and formed a complete industrial ecosystem. Yingkang Lifetime expanded the single plasma collection station scenario for blood products through investment and mergers and acquisitions in Chongqing, achieving full coverage of the three major blood use scenarios in blood stations, hospitals, and plasma stations. In addition, Shandong Province's total population ranks second in the country, and has significant population resource advantages; currently, there are nearly 20 pulping stations in Shandong Province, with Taibang and Rongsheng companies having more than 30 undeveloped pulp stations. After Haier Group enters the market, it is expected to enable Shanghai Laishi to develop and expand new pulp station resources within and outside Shandong Province, and the company's epitaxial mergers and acquisitions capabilities have been greatly enhanced.

The company's blood products business has a solid foundation, and its profitability is expected to continue to optimize the amount of pulp collected and profit per ton of pulp, which is the highest in the industry. Shanghai Race has excellent profitability. In 2022, Shanghai Laishi's annual pulping volume exceeded 1,400 tons, leading the industry. As of 2022, Tiantan Biotech, Shanghai Laishi, and Hualan Biotech alone surpassed 1,000 tons of pulp in a single year. We expect net profit to be 23.3/25.0/3.03 billion yuan for 2023-2025, with corresponding EPS of 0.35/0.38/0.46 yuan respectively, and PE corresponding to the current stock price being 22.18/20.68/17.06 times, respectively. Considering that Haier Group is expected to bring potential pulp station resources, the company's pulp collection volume is expected to increase further, high gross coagulation factor products will continue to expand, and continue to contribute to performance growth with Kirifu's albumin agency business. It is expected to drive further increase in the company's value, cover for the first time, and provide a “purchase” ratings.

Risk warning:

Market competition increases risk; new product launches fall short of expectations.