The equity change and implementation continued to empower the main business, combined with active mergers and acquisitions. The company set sail. Shanghai Laishi is a leading manufacturer of blood products in China. The main products are human blood albumin, intravenous human immunoglobulin, specific immunoglobulins, coagulation factor products, etc. The amount of pulp collected in 2022 exceeded 1,400 tons, ranking second in the industry. As of the 2023 mid-year report, the company has 4 production sites for blood products (not included in Guangxi Laishi) and has 42 single plasma collection stations in 11 provinces (including the subsidiary Tonglu Biotech, which was approved by 1 additional company in February 23, excluding 2 in Guanfeng, Guangxi). In the first three quarters of 2023, the company achieved revenue of 5.935 billion yuan (+19.87%), achieved net profit to mother of 1,787 billion yuan (+11.46%), and the main business grew steadily.
On December 29, 2023, the company announced that Kirriff, the majority shareholder of the company, plans to transfer 20% of its shares (1.33 billion shares) to Haier Group, with a total transfer price of 12.5 billion yuan and a transfer price of 9.4 yuan/share (17.6% premium over the closing price of 8 yuan/share on December 29, 23. After the transaction is completed, the controlling shareholder of the company will be changed to Haier Group, holding 26.58% of the shares, which is expected to fully empower the company in the pulp station and pulp harvesting industry chain.
Mergers and acquisitions are being consolidated and policies are springing up, and the industry has ushered in new opportunities for development. On the supply side, plans for the construction of single plasma collection stations were announced in many places during the “14th Five-Year Plan” (2021-2025) planning period. Entering the final two years of planning (24 and 25), approval of plasma stations is expected to accelerate. In recent years, there have been frequent mergers, acquisitions and restructuring in the blood products industry, and industry concentration continues to increase. Recently, the company announced the acquisition of Guangxi Guanfeng, and acquired 2 pulping stations with an annual production capacity of 200 tons. It has an in-depth layout in Guangxi, further opening up the company's pulp harvesting ceiling. In the announcement, the company explained that Kirriff plans to revise the term of the existing albumin agency agreement to 10 years and grant the company the right to renew the agreement for another 10 years. As the company's sole agent for the overseas company Kirriff in China, the importer Bai will remain stable for the next 20 years to protect the company's performance growth.
Demand continues to recover, and the company's product structure is good, and the core product advantages are obvious: the company is Kirriff's exclusive distributor in mainland China and has a high market share, and the sales growth rate of importer white is stable; the growth rate of self-produced white matches the growth rate of pulp production, providing stable support for the company's performance growth. Jing Bing: Early infections and a surge in hospitalizations led to a phased outbreak in demand for blood products. Recently, another outbreak of infectious diseases (respiratory diseases such as influenza A and B, mycoplasma, etc.), the tight balance between supply and demand for blood products may be broken again. Combined with price differences within and outside Jingbing Hospital and the profitability optimization brought about by product iteration itself, it is expected to bring new growth impetus to the company. Other blood products: The human fibrin binder market is growing rapidly, and the number of batches issued by the company is growing steadily; Eight Coagulation Factors ranked in the top three batch issuing companies in 2023, and there is room for subsequent price increases.
Investment advice
We are optimistic about the company's leading position in the industry. After Haier enters the market, it is expected that it will continue to empower it in terms of pulp station resources, etc., and the amount of pulp collected is expected to increase further. We expect that from 2023 to 2025, the company will achieve total operating revenue of 76.85/83.95/9.251 billion yuan (+17.02%/9.24%/10.19%); net profit to mother of 23.59/24.66/2,643 billion yuan (+25.5%/7.2%), corresponding to PE 18.67/17.86/16.67x, for the first time, coverage, and a “gain” rating.
Risk warning
Pulp station expansion falls short of expectations; risk of policy uncertainty; risk of impairment of goodwill, etc.