华润医药(03320.HK)：完成对博雅生物制药的收购

What's new

On November 25, 2021, China Resources （CR） Pharmaceuticalannounced that Boya Bio-pharmaceutical has issued the company78,308,575 shares and obtained the listing approval from the ShenzhenStock Exchange. Accordingly, the proposed subscription by the companywas completed pursuant to the terms and conditions of the transactiondocuments and the supplemental transaction documents.

Comments

CR Pharmaceutical Holdings has become the controlling shareholderof Boya. The company now holds a total of 147,640,553 shares in Boya,representing about 28.86% of the total share capital. Together with thevoting rights in respect of 204,690,193 shares in Boya entrusted to thecompany pursuant to the transaction documents and the supplementaltransaction documents, the company now holds a total of 40.01% votingrights.

Boya's operations maintained solid momentum. Revenue rose 8.3%YoY to Rmb2,011mn, and net profit rose 44.5% YoY to Rmb323mn in 1–3Q21. In terms of plasma products, the revenue rose 43% YoY toRmb942mn, accounting for 46.8% of the total revenue; net profit rose101% YoY to Rmb275mn, accounting for 85% of the overall net profit in 1–3Q21. Boya achieved 307.69t of pulp volume in 1–3Q21. We believe Boyawill continue to focus on pulp volume scale, R&D, and plasma productmarketing in the future.

Plasma products are being developed actively and steadily. Boyaexpects that: 1） Factor VIII would be approved for production in 2022; 2）Human von Willebrand Factor （vWF Factor） （approved for clinical trial inAugust 2021） would be put on the market in 2024; and 3） Highconcentration （10%） Intravenous Human Immunoglobulin would beapproved for clinical trial in early 2022.

Valuation and recommendation

We maintain our 2021 and 2022 EPS forecasts at HK$0.59 and HK$0.66（YoY +12.1% and +12.0%）。 The stock is trading at 6.0x 2021 and 5.3x2022 P/E. We maintain OUTPERFORM and our TP of HK$5.42 （9.2x 2021P/E and 8.2x 2022 P/E）， offering 54.4% upside.

Risks

Pressure from centralized procurement; disappointing growth in retailpharmacy and medical device distribution businesses.