Events:
On July 22, SUNING Global announced that its wholly-owned subsidiary SUNING Global Health intends to acquire 100% shares in Wuxi Suya, Tangshan Suya and Shijiazhuang Suya held by Medical and Beauty Industry Fund and Global Equity Investment in cash. The transfer prices are 130 million yuan, 94 million yuan and 113 million yuan, respectively, totaling 337 million yuan.
Comments:
Cash acquisition of three hospitals, medical and beauty business expansion. The company announced that it plans to buy 100% equity in three medical hospitals of Wuxi Suya, Tangshan Suya and Shijiazhuang Suya with 337 million cash. According to the audit report, the total revenue of the three hospitals in 2020 was 130 million yuan and the net profit was 20.93 million yuan. In the first half of 2021, the total revenue was 69.7 million yuan and the net profit was 8.08 million yuan. After the completion of this merger and acquisition, the three medical and beauty hospitals will be included in the merger and listing of listed companies, which will help to expand the scale of the company's medical and beauty business assets and profits. "Beijing Suya" in the industrial fund will not participate in this transaction for the time being, and is expected to be injected into the listed company after the follow-up profitability reaches the M & A standard).
The incubation of industrial funds has achieved results and accumulated experience in post-investment management. The three medical and beauty hospitals that received the merger and acquisition improved their profitability through five years of professional management and market-oriented operation in the industry fund in 2016. At present, the profitability of the three hospitals is at a high level in the industry, with an average net interest rate of 16.1% in 2020 (of which the net interest rate of Wuxi / Tangshan / Shijiazhuang Suya in 2020 is 17.2%, 17.2% and 13.9% respectively). The three hospitals pledged to achieve a total net profit of 2151.51Universe 2546.10 in 2023, with a compound annual growth rate of 9.5%. The company has accumulated some operation experience in the early transformation of medical beauty, which lays the foundation for the follow-up transformation.
Strong financial strength, sustainable support for the company's transformation to medical beauty in the future. In 2020, the operating income of the company is 4.287 billion yuan, the net profit belonging to the shareholders of the listed company is 1.038 billion yuan, and the net profit margin is 24.21%. The company maintains a certain sales scale and steadily achieves a net profit of about 1 billion a year, with a distributable profit of 4.485 billion yuan in 2020. however, the company has less real estate investment in recent years, and it is initially estimated that the investment capital available to the company in the future will have a scale of more than 10 billion yuan. with strong financial strength to support the company to continue to transform to medical beauty.
Investment suggestion: the company's land storage is relatively high-quality, the profit margin of the reserve project is high, and the real estate business lays the foundation for the company's transformation. The company has accumulated some operation experience in the field of medical beauty earlier. We expect the company to maintain a "prudent overweight" rating of 19 times and 18 times EPS in 21 / 22, corresponding to 19 times and 18 times PE, respectively, based on the closing price on July 22.
Risk hint: the development of medical and beauty business is not as strong as expected, and the progress of real estate development and sales is not as expected.