Incident: On June 25, Jiuqiang Biotech issued two announcements: 1) In the “Notice Concerning a Change in Shareholders' Shareholding Ratio of 5% or More”, Sinopharm Investment increased its holdings of the company's shares by a total of 6,311,800 shares from December 28, 2022 to June 24, 2024, accounting for 1.08% of the company's current voting shares. Currently, Sinopharm's share of Jiuqiang Biotech's current voting shares has increased to 16.95%. 2) It was disclosed in the “Notice Concerning Plans for Shareholders Holding 5% or More of the Company's Shares”, Sinopharm Investment plans to increase their holdings of the company's shares from June 25, 2024 to December 24, 2024, and plans to increase the company's shares by no less than RMB 30 million (inclusive) (including the portion already increased on June 25, 2024).
Comment:
The shareholding ratio of Sinopharm continues to rise, and the mixed reform of state-owned assets is progressing steadily: it was disclosed in the “Notice Concerning a Change of Shareholders' Shareholding Ratio of 5% or more by more than 1%”, Sinopharm Investments increased its holdings of the company's shares by a total of 6,311,800 shares through the Shenzhen Stock Exchange trading system from December 28, 2022 to June 24, 2024, accounting for 1.08% of the company's current voting shares. Since the company introduced Sinopharm Investment as the company's largest shareholder in 2020, Sinopharm has continued to increase its shareholding ratio. Liang Hongjun, chairman of Sinopharm Investment, became the general manager of Jiuqiang Biotech, and helped the company clarify strategic development plans and carry out division reforms, clarifying the company's strategic development ideas to consolidate its position as a leader in the biochemical and pathology industry, and carried out business division reforms at the same time to ensure the company's continuous and steady development.
Sinopharm plans to further increase its holdings, which are expected to open up the company's growth ceiling: it was revealed in the “Notice Concerning the Company's Shareholders' Shareholdings Plan to Increase the Company's Shares by Shareholders Holding 5% or More of the Company's Shares”. From June 25, 2024 to December 24, 2024, Sinopharm plans to increase their holdings of the company's shares by no less than RMB 30 million (including the portion already increased on June 25, 2024) through methods permitted by laws and regulations. The continued increase in Sinopharm's investment shows confidence in the future stable development of Jiuqiang Biotech and recognition of the company's value. Further increase in Sinopharm's future holdings will help to deeply empower Jiuqiang Biotech. In the future, Jiuqiang Biotech is expected to give full play to the advantages and synergy effects of cooperation with Sinopharm Group in terms of channels and cross-circuit mergers and acquisitions, turning the company into an IVD industry platform under Sinopharm Group, thus opening up the ceiling for the company's long-term growth.
Profit forecasting, valuation and ratings: We are optimistic about the further increase in Sinopharm's holdings and the continued empowerment of Sinopharm. We maintain the 2024-2026 net profit forecast of 6.30/7.63/920 billion yuan. The current price corresponds to the 24-26 PE of 14/11/10 times. Considering that the company's overseas pathology business and the expansion of new luminescence business contributed to the company's continuous development, we maintain the company's “buy” rating.
Risk warning: Risk of price reduction exceeding expectations, risk of changes in sales models, risk of new product development and listing progress falling short of expectations, and risk of stock price instability due to irregularities.