Recently, the company announced the “Share Transfer Agreement” with China Resources. The controlling shareholder of Tianshili will be changed from Tianshili Group to China Resources 39, and the actual controller will be changed to China Resources. The transaction will help the two sides to mutually empower each other in the fields of Chinese herbal medicine cultivation, innovative research and development, intelligent manufacturing, channel marketing, etc., enhance the core competitiveness of the entire industry chain, and promote the inheritance, innovation and high-quality development of traditional Chinese medicine between the two sides. Maintain a buy rating.

Key points to support ratings

The actual controllers of China Resources 390% Company exert a synergetic effect in the traditional Chinese medicine industry chain. On August 4, 2024, Tasly Group plans to transfer a total of about 0.418 billion shares of the company to China Resources 39 Pharmaceutical Co., Ltd. through an agreed transfer agreement, accounting for 28% of the company's total issued shares. The transfer price is 14.85 yuan per share, and the total price is about 6.212 billion yuan. The company promised to relinquish the voting rights corresponding to 5% of the company's shares held by it after the registration date of the transfer of shares to China Resources 39, so that it controls no more than 12.5008% of the voting rights. After the successful transaction, China Resources 39 will become the company's new controlling shareholder, holding 28% of the shares directly and corresponding voting rights. The actual controller was changed to China Resources.

Strengthen research and development guarantees, and promote the digital development of traditional Chinese medicine with state-owned capital support. Cooperation and resource integration with China Resources 39 will further promote the company's development in the field of modern traditional Chinese medicine research and development, and enhance R&D capabilities and momentum. The company attaches importance to digital development and has applied new technologies such as big data, big models, and AI to improve R&D efficiency domestically. The two sides will cooperate in depth in the fields of digital traditional Chinese medicine research and development, intelligent manufacturing, and pharmaceutical innovation, and combine traditional Chinese medicine theory, clinical experience and digital technology to establish a new paradigm of digital traditional Chinese medicine research and development. We are optimistic that China Resources 39 will empower the company in all aspects, effectively strengthen innovative drug research and development support and scientific and technological innovation, and enhance the company's market competitiveness and profitability.

Achieve complementary marketing advantages and accelerate product pipeline layout. The company has certain advantages in hospital side and academic marketing. It has a variety of exclusive varieties, such as compound salvia drops, serum brain pellets, astragalus ginseng, etc., and has built a modern traditional Chinese medicine system focusing on cardiovascular and cerebrovascular use, forming a strong marketing network covering the whole country. China Resources 39 is in a leading position in the pharmaceutical manufacturing and commercial fields. Through the “1+N” strategy, China Resources 39 has created a number of major products. The strategic layout advantages of the two sides complement each other, and synergy effects in the industrial chain are expected to be shown, promoting the launch of new products and the marketization of R&D results. At the same time, the cooperation with Guoxin Investment will optimize resource allocation and is expected to promote the broadening of the pipeline layout of innovative Chinese medicine.

valuations

The company's net profit for 2024-2026 is expected to be 1.075 billion yuan, 1.135 billion yuan, and 1.273 billion yuan, respectively. The corresponding EPS is 0.72 yuan, 0.76 yuan, and 0.85 yuan, respectively. The PE corresponding to the current stock price is 19.9 times, 18.8 times, and 16.8 times, maintaining the purchase rating.

The main risks faced by ratings

Market competition increases risks, industry policy changes, and raw material price increases.