The company's recent situation

The company announced that it plans to invest in Sichuan Jiuyiyuan Particle Technology Co., Ltd. with its own capital and obtain 10% of its shares after the capital increase, with a transaction price of 0.12 billion yuan.

reviews

The target company focuses on cyclotron products. Jiuyiyuan specializes in R&D, production and sales of cyclotron accelerators. Its main products are accelerators with different energy levels such as 7 MeV, 11 MeV, and 20 MeV. In the field of nuclear medicine, medical cyclotrons are mainly used to prepare PET, PET/CT, and PET/MR related positron radioisotopes. They are one of the core devices for nuclear medicine diagnosis and treatment. Related equipment has advantages in treating malignant tumors, cardiovascular and cerebrovascular diseases. According to the company's announcement, Jiuyiyuan earned 46.83 million yuan in 2023 and had a net loss of 9.96 million yuan.

The transaction was priced at $0.12 billion, and the target company made a performance commitment. According to the company's announcement, Jiuyiyuan Company's last round of financing was valued at 0.584 billion yuan (financing amount 0.134 billion yuan) after investment in January 2022. The company now plans to use its own capital to invest in Jiuyiyuan Company and obtain 10% of the shares in the target company after the capital increase. The transaction price is 0.12 billion yuan, and the pre-investment valuation is 1 billion yuan. On the other hand, in this transaction, Jiuyiyuan made performance promises: 1) operating revenue of not less than 80 million yuan in 2023, or 0.25 billion yuan of cumulative revenue for 2023-2025; and 2) obtaining sales orders for at least 3 units of Jiuyiyuan 20MeV medical cyclotron products in 2024.

Improve the overall solution layout and strengthen the competitiveness of the molecular imaging sector. Radioisotopes are the foundation of nuclear medicine diagnosis and treatment. As an important part of molecular imaging technology, PET imaging will play an increasingly important role in precision medicine and diagnosis of related diseases. Lianying Medical's molecular imaging equipment is competitive in the industry. According to the company's announcement, according to the new domestic market value statistics, the company's PET/CT and PET/MR products have ranked first in the Chinese market share for many years. We believe that through this investment in Jiuyiyuan, Lianying Medical is expected to further enhance the company's overall solution capabilities in the future molecular imaging sector and continue to consolidate the company's leading position in the molecular imaging sector.

Profit forecasting and valuation

We have kept the company's revenue and profit forecast unchanged for the time being, keeping the target price unchanged at 160 yuan (based on DCF valuation), which is 43% of the target price compared to the current stock price, maintaining an industry performance rating.

risks

The recovery in industry recruitment fell short of expectations, mergers and acquisitions fell short of expectations, and industry competition intensified.