Event
On July 20, SUNING Global Health, a wholly-owned subsidiary of the company, signed an equity transfer agreement with the medical and beauty industry fund and global equity investment of the company and major shareholders.
The company plans to acquire 100% equity of Wuxi Suya, Tangshan Suya and Shijiazhuang Suya in cash, with transfer prices of 130 million yuan, 94 million yuan and 113 million yuan respectively, with a total transfer price of 337 million yuan.
Brief comment
The high-quality achievements of the transformation of medical beauty are in the bag, and the acquisition consideration is reasonable. The three medical companies that the company acquired and merged, Wuxi Suya, Tangshan Suya and Shijiazhuang Suya, were included in the medical industry fund established by the company and major shareholder SUNING Global Group when the company transformed Medical Beauty in 2016. After nearly five years of cultivation, the achievements of the transformation of medical beauty have been presented and incorporated into the listed companies. The three medical beauty standards are all hospital-level and of relatively high quality: Wuxi Suya and Tangshan Suya have a total area of more than 5,000 square meters, and Shijiazhuang Suya has a total area of more than 6,000 square meters. Wuxi Suya is the largest medical cosmetic hospital in Wuxi and the only authorized injection center in Wuxi. Shijiazhuang Suya is a medical plastic surgery hospital qualified as a leader in both scale and professional and technical fields in Hebei Province. According to the financial data in 2020, the income and net profit of Wuxi Suya, Tangshan Suya and Shijiazhuang Suya hospitals are 46.41 million yuan, 403.7 million yuan and 43.33 million yuan respectively, and the net interest rates are 17.2%, 17.2% and 13.9% respectively, which are at a high level. The company spent a total of 337 million yuan in cash to acquire the targets of three medical and American hospitals. The net profits of the three hospitals from 2021 to 2023 were 2152 yuan, 2546 yuan and 27.48 million yuan respectively, representing a three-year compound growth rate of 9.5%. The acquisition consideration corresponds to 15.66 times of the bet performance in 2021, which is at a reasonable level.
Medical beauty business expansion started, reaffirming the company's transformation of the three core advantages of medical beauty. This time, the company transferred the high-quality results of in vitro transformation into the reports of listed companies, on the one hand, it shows that the company's medical and beauty business experience has been accumulated to a certain extent, on the other hand, it also reflects the company's determination to transform medical beauty, make it bigger and better, and strengthen its medical beauty business. We believe that the company's transformation of medical beauty has three core advantages: 1, business precipitation advantage. The company has long accumulated in the field of medical beauty, has formed its own brand "Suya Medical Beauty", and will expand the moat through mergers and acquisitions in the future. 2. Capital advantage. At present, the company has abundant land reserves, high profit margin and low financial debt ratio, and there are few new land reserves after 2016. The cash flow of the future development business will provide strong financial support for the medical and beauty business. In addition, the company also has 5 billion medical and American industry funds set up with major shareholders that can be used for mergers and acquisitions. 3. Capital platform and incentive advantages.
The company's repurchased shares account for 9.48% of the total share capital and are intended to be used as employee stock ownership or equity incentives, which will be attractive to medical and beauty professional managers in the future.
Maintain the buy rating. We estimate that the EPS of the company from 2021 to 2023 is 0.40, 0.48, 0.59 respectively. The company's financial position is good, the real estate profitability is strong, and the strength to the medical and beauty business continues resolutely, so it gives the buy rating.
Risk hints: real estate regulation exceeded expectations; mergers and acquisitions in the medical and beauty industry fell short of expectations.