On June 24, 2024, the company received an audit opinion from the Shanghai Stock Exchange on the company's application to issue shares to specific targets. The review results were approved. The issuance targets of shares to specific targets are Biotech Holdings, Mr. Zhang Chongyu, and Ms. Zhang Jing. The number of A-shares issued is 35 million shares, no more than 30% of the total share capital before issuance. The issue price is 8.23 yuan/share. The total amount of capital to be raised is no more than RMB 290 million. The total amount of capital raised after deducting the issuance fee will be used to supplement working capital.
Key points of investment
Optimize the shareholder structure and lay a good foundation for the company's continuous and stable development. Prior to this issuance, the company's share distribution was scattered, and there were no controlling shareholders or actual controllers. Among the specific targets of this issuance, the number of company shares held by Biotech Holdings will increase to 149 million shares, accounting for 13% of the total share capital after issuance; the number of shares directly held by Zhang Chongyu and Zhang Jing's father and daughter will increase to 35 million shares, accounting for 3% of the total share capital. Combined, their indirect holdings will control 16% of the company's shares, which can have a significant impact on the decisions of the company's shareholders' meeting. The three specific targets will all become the company's controlling shareholders, and their father and daughter will become the actual controllers of the company. It fully demonstrates the support of the largest shareholder and management for the company's development, confidence in the company's future prospects, and recognition of the company's value, which is conducive to ensuring the long-term sustainable and stable development of the company.
Improve the company's financial strength and guarantee the capital needed for future development. Currently, the domestic animal insurance industry has entered a mature development period, which places higher demands on the enterprise's independent research and development capabilities, product quality and cost control capabilities, and comprehensive solution capabilities. In order to meet long-term development needs, the company has established and optimized more than 10 R&D technology platforms, including pathogen detection and isolation platforms, ruminant vaccine platforms, pet vaccine platforms, and African swine fever integrated development platforms. The R&D pipeline fully covers various vaccine development technologies. Continued increase in R&D investment has also increased the demand for working capital. Certain working capital reserves help companies seize market opportunities in the process of increasing industry concentration and save strength for long-term healthy development.
Actively promote epitaxial mergers and acquisitions and enhance service capabilities for all products
As the agglomeration effect of the animal protection industry intensifies and the scale of the downstream aquaculture industry increases, market competition becomes more intense. The company will implement a two-wheel drive strategy of endogenous development and epitaxial development, continuously optimize and iterate the veterinary vaccine product matrix, and supplement the shortcomings of veterinary chemical products through mergers and acquisitions on this basis, form a benign driver of “drug and vaccine linkage”, and enhance sustainable profitability. At the same time, seizing the development opportunities of the domestic pet market, the company uses independent investment to promote the development of pet vaccines, promote the development of other products through industrial mergers and acquisitions and investment, achieve rapid supplementation of pet medication and other related products, enhance capacity building and channel construction, and continuously optimize production capacity and channel construction. In the future, it will also become an important driver for the company's revenue scale and profit growth.
Investment advice
The estimated net profit for 2024-2026 is 3.6, 4.1, and 520 million yuan, corresponding to PE of 23, 20, and 16X. We believe that the successive introduction of new products and the extension of the non-foot-and-mouth disease strategy will fully release the company's profit space. At the same time, the development of epitaxial mergers and acquisitions will further help the company expand its business scale, become a leading global animal insurance company, and maintain a “buy” rating.