The equity transfer plan was introduced, and China Resources 39 joined hands to open a new chapter of development. On August 4, 2024, the company announced that its controlling shareholder, Tasley Group, and its co-actors intend to transfer a total of 418,306,002 shares of the company to China Resources 39 at a price of 14.85 yuan/share, accounting for 28% of the company's total share capital. The total transfer price was approximately 6.212 billion yuan. Furthermore, after the registration date of the shares transferred to China Resources 39, the Tasley Group promised to control no more than 12.5008% of the voting rights by relinquishing voting rights corresponding to 5% of the company's shares held by it. After the transaction is completed, the total shareholding of Tasly Group and its co-actors will be reduced from 50.5008% to 17.5008%. The controlling shareholder of the company will be changed from Tasly Group to China Resources 39 (holding 28% of the shares), and the actual controller will be changed to China Resources. We are optimistic about the growth space brought about by the company's continuous innovation and R&D, as well as the all-round development support brought by China Resources 39 and Guoxin investments in the future. The net profit forecast for 2024-2026 is estimated at 1.183, 1.279, and 1.38 billion yuan, EPS is 0.79, 0.86, and 0.92 yuan/share. The PE corresponding to the current stock price is 17.8, 16.4, and 15.2 times, respectively, maintaining a “buy” rating.

The strategy is consistent and the goal is to jointly promote the high-quality development of the traditional Chinese medicine industry. Both China Resources 39 and Tianshili are leading enterprises in the Chinese pharmaceutical industry. The strategic layout of the two sides is highly compatible. They both take the traditional Chinese medicine industry as the main development line, and are committed to the integrity, innovation, inheritance and development of traditional Chinese medicine. This strategic cooperation will help the two sides to empower each other, make the company's innovation advantages more prominent and its position as an innovation leader more stable; also help China Resources 39 rapidly improve its innovation capabilities and promote China Resources 39 to become a leader in the Chinese medicine industry.

The two sides will give full play to the synergy of the traditional Chinese medicine industry chain, repair and strengthen the chain more quickly, and enhance the competitiveness of the entire industry chain.

State-owned assets are revealed to help optimize the allocation of resources

At the same time, the company announcement revealed that Tasley Group plans to transfer 74,697,501 shares of the company's shares to Guoxin Investment at a price of 14.85 yuan/share through an agreed transfer agreement, accounting for 5% of the company's total share capital, for a total transfer price of about 1.109 billion yuan. As a state-owned capital operating company, China Guoxin will use its resource allocation function and cooperate deeply with China Resources 39 to promote the optimization of the company's industrial layout and scientific and technological innovation, and support the development of innovative drugs.

Risk warning: Market competition intensifies, equity change progress falls short of expectations, and product development progress falls short of expectations.