The company's recent situation
On February 28, the company announced that its wholly-owned subsidiary, Beijing Langzi Medical Management, plans to acquire 70%, 18%, and 12% of the shares in Jimei, Zhengzhou held by Bochen 9, Wuhu Jujin, and Wu Hongming respectively. The share transfer price was 1.08/0.28/0.19 billion yuan respectively, for a total of 155 million yuan. After the transaction is completed, the company will hold 100% of the shares in Jimei, Zhengzhou, and Jimei will be included in the scope of the company's consolidated statements.
reviews
1. It is proposed to acquire Jimei, Zhengzhou with 155 million yuan in cash to promote the national expansion of the medical and aesthetic business. According to the company's announcement, Jimei, Zhengzhou specializes in medical and aesthetic services. It is located in the Erqita business district of Zhengzhou. The total business area is 6,586 square meters, with a total business area of 6,586 square meters. The business scope mainly includes plastic surgery, microplastic surgery, dermatology, dentistry, intimate medicine, and traditional Chinese medicine treatment departments. The revenue of Jimei, Zhengzhou in 2022/23 was 0.69/106 million yuan, +52.7% year-on-year, net profit was -1718/7.69 million yuan, respectively, and the net interest rate in 2023 was 7.3%; the performance promise is that net profit for 2024-26 will not be less than 10,54/1,282/15.29 million yuan, respectively. Based on Zhengzhou Jimei's equity valuation of 155 million yuan, the transaction corresponds to 1.5x P/S and 20x P/E in Zhengzhou Jimei in 2023. After the transaction is completed, Jimei, Zhengzhou will be included as a wholly-owned subsidiary in the scope of the company's consolidated statements. We believe it is expected to increase the company's medical and aesthetic assets and profit scale and accelerate the national layout of the medical and aesthetic business.
2. Upgrade your own brand of high-end hyaluronic acid products and extend the upstream layout of the industrial chain. The company cooperated with the upstream supply chain to create its own brand of high-end hyaluronic acid “Funivia”, and released an upgraded version of the product in October 23, including two products, Zunya and Zhi Ya, with the new positioning of “high-end hyaluronic acid more suitable for the Oriental face”, and the effects are safer, more comfortable and natural. According to the official public account report, as of October '23, Funivia has covered nearly 50 core hospitals in 16 cities across the country. We believe that in the future, as the sales contribution of our own products increases further, it is expected that product procurement costs will be reduced and the company's profit margins will be boosted.
3. The “1+N” model progresses steadily, and endogenous and epitaxial co-drive medium- to long-term growth. The company steadily promoted the expansion of the “1+N” model, completed the upgrade of Shenzhen Milan Baiyu from an outpatient department to a central hospital in April 23, further strengthened the layout in South China, and carried out chain and standardized replication through “Crystal Skin Medicine and Aesthetics” to continue to expand the national market based on the advantages of the southwest region. In addition, a number of external M&A fund projects are being cultivated steadily, and we believe that after a successful climb, they can be included in the consolidated statements to further enhance the company's performance. We are optimistic about the company's broad growth prospects as a chain-based national medical and aesthetic group.
Profit forecasting and valuation
Maintain the 2023-25 earnings forecast. The current stock price corresponds to 24-24xP/E. Maintaining an outperforming industry rating and target price of 27 yuan, corresponding to 38xP/E in 24 years, there is 58% room for an increase of 58% compared to the current stock price.
risks
Increased competition; store expansion falls short of expectations; risk of medical malpractice; risk of inventory impairment.