Proposed merger and acquisition of Shanghai Yuanshi, the company officially enters the analytical instrument market
Incident: On May 23, Haier Biotech announced that it plans to acquire a holding of Shanghai Yuanshi Instrument Co., Ltd. (hereinafter referred to as “Shanghai Yuanshi”) through an agreement transfer, holding 70% of Shanghai Yuanshi's shares. Shanghai Yuanshi, the target of this acquisition, was founded in 2008. It is a national high-tech enterprise specializing in R&D, production, sales and service of scientific analytical instruments. It has a rich market segment product line such as spectroscopy, organic element analysis, and pre-treatment. As a “specialized and innovative” enterprise, the company has obtained more than 70 national patents and software certificates with continuous R&D and innovation capabilities. At the same time, its product technology application direction has good market influence. Spectroscopic and organic element analysis equipment ranks first among domestic instruments and is sold to more than 90 countries and regions around the world.
The analytical instrument market has great potential for growth, and there is still plenty of room for domestic replacement. According to SDI statistics, the global analytical instrument market is expected to be 75 billion US dollars in 2022. The Chinese market accounts for about 12-15%, and the growth rate is higher than the global average. Among them, organic element analysis instruments are important equipment in chemical, electronics, food and other industries, and spectral analysis instruments are indispensable high-end equipment in the fields of scientific research, environmental monitoring, agricultural and food safety products, and medical care. Demand in the domestic market has risen rapidly in recent years. According to data from the Huajing Industrial Research Institute, the overall scale of the industry will exceed 8 billion yuan in 2022, and the domestic spectrometer market is expected to reach 10.165 billion yuan in 2025. Domestically, the analytical instrument market is mainly occupied by imported manufacturers. Shanghai Yuanshi is in the first tier of domestic production. In particular, it has great technical and channel advantages in the UV analysis market, and there is plenty of room for domestic replacement in the future.
Mergers and acquisitions bring complementary advantages and enrich the company's overall laboratory solutions. After the merger and acquisition is completed, the two sides will develop collaboratively by leveraging their respective advantages in R&D, market and brand. On the product side, relying on Haier Biotech's advanced IoT technology platform and Shanghai Yuanshi's complete product lineup, the two sides will build an analytical instrument interconnection platform, improve smart laboratory application scenarios, and expand new laboratory scenarios such as environment, chemicals, and third-party inspection; in terms of channels, the two sides will use Haier Biotech's overseas localization layout to further enhance its competitive advantage in the international market; on the brand side, with Haier Biotech's word-of-mouth effect and rich ecological resources, the two sides will continue to expand their business boundaries and achieve in-depth development of the scientific instrument industry chain. The acquisition will quickly complete the company's analytical instrument product line and transform it into a competitive advantage in the market, help the company officially enter the laboratory analytical instrument circuit, enrich the company's overall laboratory solutions, and provide strong momentum for future growth.
Profit Forecast and Valuation:
We expect the company's 2024-2026 net profit to be 5.3/6.5/82 billion yuan, EPS is 1.66/2.06/2.58 yuan, respectively, and the current stock price is 23.34/18.78/14.99 times PE, respectively. Give it a “buy” rating.
Risk warning:
Business development falls short of expectations; market competition increases risk; overseas geopolitical risk; product development falls short of expectations risk.