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"Medicine Mao" Pien Tze Huang's big acquisition move! Pien Tze Huang's latest announcement shows that the company plans to acquire 100% of the equity of Zhangzhou Mingyuan Spice Co., Ltd. (hereinafter referred to as "Mingyuan Spice") for 254 million yuan. However, there is a certain premium in this transaction, and Mingyuan Spice's revenue in 2023 and the first quarter of 2024 was 0, and its net profit in the first quarter was even a loss. The premium acquisition of a company with zero revenue, Pien Tze Huang intends to acquire Zhangzhou Narcissus Pharmaceutical Co., Ltd. (hereinafter referred to as "Narcissus Pharmaceutical"), in which Mingyuan Spice holds a 30% stake, which is the first wind oil essence factory in China.

Invested in the first wind oil essence factory in China

The latest announcement from Pianzihuang shows that its wholly-owned subsidiary Zhangzhou Pianzihuang Investment Management Co., Ltd. intends to use 254 million yuan of its own or self-raised funds to acquire 100% of the equity of Mingyuan Spice from Zhangzhou State-owned Assets Investment and Operation Co., Ltd. (hereinafter referred to as "State-owned Assets Investment and Operation Co., Ltd.").

The counterparty of this outbound investment, China Investment Corporation, was originally a subsidiary of Zhangzhou Jiulongjiang Group Co., Ltd. (hereinafter referred to as "Jiulongjiang Group"), the controlling shareholder of Pianzihuang. In February 2024, it transferred out its equity in Jiulongjiang Group. Therefore, this matter constitutes an affiliated transaction.

It is worth mentioning that financial data show that in 2023 and the first quarter of 2024, Mingyuan Spice’s operating income was 0, and its net profit was approximately 13.9426 million yuan and -0.07 million yuan respectively.

On the premise of continuing operation on the valuation base date of December 31, 2023, the book value of Mingyuan Spice's total assets is 185 million yuan, the book value of total liabilities is 42.0008 million yuan, and the book value of owners' equity is 143 million yuan. After the asset-based valuation, the total assets of Mingyuan Spice are valued at 296 million yuan, the total liabilities are valued at 42.0008 million yuan, and the owner's equity is valued at 254 million yuan, with an assessed value-added of 112 million yuan and a value-added rate of 78.29%.

Regarding company-related issues, a Beijing Business Daily reporter sent an interview letter to Pianzihuang, but as of press time, no response was received from the company.

Intends to acquire 30% equity of Narcissus Pharmaceuticals

The main reason for Pianzihuang's transaction was Mingyuan Spice's 30% equity investment in Narcissus Pharmaceuticals.

According to the information, Shuixian Pharmaceutical is a pharmaceutical enterprise integrating scientific research, development, production and sales, with a history of more than 50 years. It is the first manufacturer of Fengyoujing in my country. Its leading products are Shuixian brand products Fengyoujing, Wuji Cream, Dingpeng Cream, Ruanmailing, Manshanbai, Mian'anning, etc.

Pien Tze Huang said that Shuixian Pharmaceutical's main business is the research and development, production and sales of ointments, and it belongs to the same pharmaceutical manufacturing industry as the company. After the acquisition is completed, Shuixian Pharmaceutical can carry out in-depth cooperation with the company in the fields of brand promotion, product marketing, channel expansion, etc., relying on the company's existing management advantages and brand advantages to achieve synergy, increase the sales revenue, market share and sustainable development capabilities of both parties, and further enhance the market competitiveness of both parties.

Financial data shows that in 2022 and 2023, Narcissus Pharmaceutical's operating income was 283 million yuan and 306 million yuan respectively, and its net profit was 35.0273 million yuan and 47.0082 million yuan respectively, and its performance showed a steady upward trend.

In addition, Pianzihuang said that due to its good operating conditions and continuous improvement in profitability, Narcissus Pharmaceutical's dividends are stable, with cash dividends of 10 million yuan and 20 million yuan in 2022 and 2023 respectively. Assuming that the dividend level remains at 10 million yuan after the acquisition is completed, it will bring the company 3 million yuan in dividend cash inflow each year.

It is worth mentioning that the semi-annual performance report recently disclosed by Pien Tze Huang shows that the company achieved operating income of approximately RMB 5.65 billion in the first half of the year, an increase of 11.99% year-on-year; the corresponding attributable net profit was approximately RMB 1.72 billion, an increase of 11.61% year-on-year. Although both revenue and net profit increased, the company's semi-annual net profit growth rate has slowed down. Investment and financing expert Xu Xiaoheng said that with the slowdown in performance growth, this transaction may be intended to enhance the company's long-term profitability.

Beijing Business Daily reporter Ding Ning