Introduction to this report:

Haier Group plans to become the actual controller of the company. The governance structure is expected to improve, production and operation efficiency is expected to improve, first coverage, and an increase in holdings rating.

Key points of investment:

Covered for the first time, an increase in holdings rating is given. The actual controller of the company plans to change to Haier Group. The governance structure is expected to improve, and production and operation efficiency is expected to improve. It is predicted that the 2023-2025 EPS will be 0.33, 0.35, and 0.40 yuan, respectively. Referring to comparable company estimates, the 2024 target PE is 29X, corresponding to the target price of 10.09 yuan. Covered for the first time, an increase in holdings rating is given.

First-tier blood products enterprise, self-production and agency business go hand in hand. The company is one of the earliest blood products companies. Since 2014, it has continued to grow through acquisitions such as Banghe Pharmaceutical, Tonglu Biology, Zhejiang Haikang, and Guangxi Guanfeng. By the end of December 2023, it had 5 blood product production bases in Shanghai, Zhengzhou, Hefei, Wenzhou, and Nanning. In total, it had 44 single plasma collection stations distributed in 11 provinces (autonomous regions). The number of varieties that can be extracted is leading in the industry, and the amount of pulp collected has been growing steadily.

Since 2021, it has acted as Kirriff's albumin import business, and achieved revenue of 960 million yuan and 2.73 billion yuan in 2021 and 2022, respectively, contributing to strong growth momentum.

Haier Group plans to become the actual controller and further deepen cooperation with Kirriff. The company has had no controlling shareholders or actual controllers for more than two years. Haier Group and Kirriff signed a “Strategic Cooperation and Share Purchase Agreement” on December 29, 2023, to become the company's actual controller, which is expected to enable the acquisition of fresh pulp plants and help improve production and operation efficiency. The agreement also further clarified the exclusive agency rights for imported albumin, extended the GDS performance commitment period, etc., and further reduced related business risks.

Catalyst: The change of control was advanced, and the new pulp station was approved

Risk warning: Haier Group ultimately failed to become the actual controller. Haier Group's capabilities fell short of expectations, long-term equity investment and risk of impairment of goodwill