Incident: Shanghai Laishi plans to acquire 95% of Guangxi Guanfeng's shares with RMB 481 million.

Acquired Guanfeng, Guangxi, and acquired two plasma stations and a 200-ton blood products manufacturer. The company plans to use 340 million yuan to acquire 67.2% of Guangxi Guanfeng's shares from natural person shareholders, and to acquire 27.78% of Guangxi Guanfeng's shares with the Third Phase Fund for 140 million yuan. Guangxi Guanfeng is located in Nanning City, Guangxi Zhuang Autonomous Region. Its products include three varieties, Renbai, Jing Bing, and Muscle Prop, with an annual production capacity of 200 tons. It is under the jurisdiction of two single plasma collection stations that have already been built (Yongfu Guanfeng Plasma Station and Xincheng Guanfeng Plasma Station). From January to August 2023, Guangxi Guanfeng's net profit was -10.3296 million yuan, and the overall valuation of this acquisition was 5.1 billion yuan.

Deploy the Guangxi region to lay the foundation for future plasma expansion. Before this acquisition, the company had 42 pulp stations and collected more than 1,400 tons of pulp in 2022. After this acquisition, the number of the company's pulp stations will increase to 44. According to the company's announcement, after this acquisition, the company will actively promote the acquisition of pulping licenses and the resumption of production at two pulp stations in Guanfeng, Guangxi. Guangxi Guanfeng is the only blood products manufacturer in Guangxi Autonomous Region. Referring to the operation situation of plasma stations related to similar blood products companies, we believe that the value of plasma stations in the Guangxi Autonomous Region is outstanding. The company's acquisition is conducive to further expanding the excellent plasma resources of the Guangxi Autonomous Region in the future and opening up the ceiling for the company's plasma volume growth in the future.

Profit forecast and investment recommendations: The company's 2023-2025 operating income is estimated to be 7.58 billion yuan, 8.76 billion yuan and 10.16 billion yuan respectively, and net profit of 2.17 billion yuan, 2.52 billion yuan and 2.93 billion yuan respectively. The company's self-operated blood products business has outstanding profitability, and agent importers have enhanced the status of the industry and maintained a “buy” rating.

Risk warning: risk of pulp extraction volume falling short of expectations; risk of increased industry competition; risk of exchange rate fluctuations.