Incident: The company recently announced that its wholly-owned subsidiary Maixin Biotech subscribed to Longjin Biotech's additional registered capital of 6 million yuan with 32 million yuan, and the remaining portion was included in the capital reserve. After the transaction was completed, Maxine Biotech held 25.21% of Longjin Biotech's shares.
Comment:
Acquiring part of Longjin Biotech's shares, performance promises rapid growth: On February 25, Jiuqiang Biotech announced that its wholly-owned subsidiary Maixin Biotech plans to use 32 million yuan of its own capital to subscribe to Longjin Biotech with an additional registered capital of 6 million yuan. The pre-investment valuation of Longjin Biotech was RMB 94.933,800. After the transaction, Maxine Biotech will hold 25.21% of Longjin Biotech's shares. In addition, Maixin Biotech requires that existing shareholders other than the founding shareholders of Longjin Biotech acquire no less than 27% of Longjin Biotech's shares from Longjin Biotech's existing shareholders within 12 months of the transaction at an average purchase price of not more than 6.66 yuan/1 yuan of registered capital. At the same time, Longjin Biotech promises that the revenue from 2024 to 2026 will not be less than 5 million yuan, 8 million yuan, 12 million yuan, or the cumulative revenue for three years will not be less than 25 million yuan. If the standard is not met, Maixin Biotech has the right to request compensation of 50% of the difference between the threshold value and the actual value; if the standard is met, the bonus will be paid by multiplying the actual income value by 20%.
Business collaboration strengthens the pathology sector and further builds a platform-based enterprise: Longjin Biotech's main business focuses on the field of tumor molecular pathology diagnosis, covering the clinical diagnosis needs of tumors at different levels, from early screening, differential diagnosis of tumors, guided medication for tumor treatment, and tumor prognosis. The company's leading products are FISH series products. Currently, more than 170 types of FISH probes have been marketed, with 1 NMPA Class 3 certificate, more than 100 Class 1 certificates, and multiple CE certifications. Longjin Biotech can make full use of Maixin's existing customer resources and utilize the channel advantages and brand effects of Jiujiang Biotech and Sinopharm investments. It is expected to achieve a high revenue growth rate and achieve rapid development within the next 5 years. At the same time, as part of the Jiuqiang Biomedical Diagnosis Division, the acquisition of Longjin Biotech became a landmark event in the field of pathological diagnosis after its division system reform. It is of great strategic significance for Jiuqiang Biotech to expand and strengthen its pathological diagnosis business and build a platform-based enterprise.
Profit forecasting, valuation and rating: We are optimistic about the progress of the company's new strategic development plan and the continued empowerment of Sinopharm. We maintain the 2023-2025 net profit forecast of 522/6.73/834 million yuan. The current price corresponds to the 23-25 PE is 23/17/14 times, maintaining the company's “buy” rating.
Risk warning: Risk of price reduction exceeding expectations, risk of changes in sales models, risk of new product development and listing progress falling short of expectations, and risk of stock price instability due to irregularities.