Incident: The company issued an announcement. Maixin Biotech, a wholly-owned subsidiary, plans to purchase Longjin Biotech with an additional registered capital of RMB 6 million with its own funds. Longjin Biotech's pre-investment valuation was RMB 94.933,800. After the transaction is completed, Maxine Biotech will hold 25.21% of Longjin Biotech's shares.

The acquisition of leading FISH racetrack companies is expected to achieve business resonance with Maxin. Established in 2014, Longjin Biotech is committed to the field of pathological diagnosis technology, focusing on the cutting edge of pathomedicine, independently designing, developing, producing, and commercializing pathological diagnostic reagents, instruments, and software. Especially in the FISH field, the company currently has more than 400 types of probes. It has the most complete human all-gene BAC clone library in China, and has mastered various probe preparation processes. It is an industry-leading enterprise in this segment. According to the announcement, in 2023, Longjin Biotech achieved operating income of 5.4417 million yuan and a loss of 12.2384 million yuan. Maixin Biotech has been deeply involved in pathological diagnosis for many years, and has established long-term and stable cooperative relationships with more than 4,000 partners across the country, and has strong synergy with Longjin Biotech's business. In the future, Longjin Biotech is expected to make full use of Maixin Biotech's existing customer resources and utilize the channel advantages and brand effects of Jiujiang Biotech's investment. It is expected to achieve a high revenue growth rate and achieve leapfrog development within the next 5 years; at the same time, Longjin Biotech itself will also contribute important strategic significance to Maixin Biotech's supplement product pipeline and build a platform-based enterprise.

The performance promises a compound revenue growth of 30+%, and is expected to enhance the company's performance after subsequent consolidation. According to the announcement, Longjin Biotech, its founding shareholders and its actual controller promised that Longjin Biotech's 2024-2026 revenue should not be less than 5 million yuan, 8 million yuan, and 12 million yuan respectively, corresponding to annual revenue growth of -8%, 60%, and 50% year-on-year, corresponding to a compound revenue growth rate of about 30.2% in 2023-2026; or the cumulative revenue for 3 years should not be less than 25 million yuan. If this commitment is not fulfilled, Longjin Biotech, its founding shareholders, and their actual controller are required to pay cash compensation of 50% of the difference in income according to the performance assessment and actual realized income; if the promise is completed, the actual revenue value exceeds the performance commitment indicator* 20% bonus to Longjin Biotech's management. This performance promise shows Longjin Biotech's full confidence in medium- to long-term development. At the same time, it is also expected to deeply bind relevant management teams to corporate interests and stimulate team enthusiasm. Furthermore, within 12 months of the completion of this transaction, Maixin Biotech can acquire no less than 27% of Qianjin Biotech's shares at an average purchase price of no more than 6.66 yuan/1 yuan of registered capital. At that time, Maixin Biotech is expected to become the shareholder of Longjin Biotech Holdings and achieve the target merger, which is expected to further enhance the performance of Jiujiang Biotech.

Profit forecast and investment suggestions: According to the company announcement, it is expected that with the rapid progress of the company's national improvement exhibition, the company's regular business is expected to continue to improve quality and efficiency, the pathology and blood coagulation business is expected to continue to grow rapidly, and traditional biochemical businesses are expected to take the lead. Longjin Biotech is expected to further enhance the company's overall performance after harvesting. The company's revenue is expected to be 17.44, 20.99, and 2,539 billion yuan in 2023-2025, up 15%, 20%, and 21% year-on-year; the net profit of 2023-2025 is expected to return to mother of 5.10, 6.09, 8.08 100 million yuan, a year-on-year increase of 31%, 19%, and 33%. The company's current stock price corresponds to 20.0, 16.8, and 12.7 times PE from 2023-2025. Considering the upward trend in the company's biochemical and blood coagulation business, the pathological circuit continues to be booming, and new products such as chemiluminescence are expected to be rapidly released and maintain a “buy” rating.

Risk warning: Overseas cooperation falls short of expectations, marketing of new products falls short of expectations, and there is a risk that public data used in research reports may be delayed or not updated in a timely manner.