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Zebra Consumption Shen Tuo

"China's magic oil" and "liver protecting magic medicine" are suddenly about to merge.

Pianzihuang, with a market value of hundreds of billions, has actually set its sights on the humble cooling oil business and is planning to indirectly acquire 30% of the shares of the related company Narcissus Pharmaceutical for 250 million yuan.

When performance growth hits a bottleneck, can applying some cooling oil help you refresh yourself?

The market did not buy it. Yesterday, the share price of Pianzihuang remained calm and closed with a slight drop of 0.60%.

250 million to buy a company with zero revenue

On August 10, Pianzihuang (600436.SH) disclosed an announcement that its wholly-owned subsidiary Pianzihuang Investment plans to acquire 100% of the equity of Mingyuan Spice from Zhangzhou Guotou Company for a consideration of RMB 254 million.

Since Guotou Company was originally a subsidiary of Jiulongjiang Group, the controlling shareholder of Pianzihuang, and its equity was separated in February this year, this transaction constitutes an affiliated transaction.

The company stated that this acquisition was based on comprehensive considerations of improving the upstream and downstream of the big health industry chain, in order to further focus on the main business, give play to synergy effects, and cultivate new growth points.

As of the end of 2023, the audited book value of all shareholders' equity of Mingyuan Spice was 143 million yuan, and the overall valuation increased by 78.29% using the basic asset valuation method.

Data shows that Mingyuan Spice has no actual operating business of its own, so the company's operating income has been zero for a long time. In 2023, the company realized a net profit of 13.9426 million yuan.

Mingyuan Spice's core asset is its investment in Narcissus Pharmaceuticals, in which it currently holds a 30% stake.

Narcissus Pharmaceutical is 70% controlled by listed company Qingshan Paper. Its leading products are Narcissus brand Fengyoujing and Wuji ointment, and its main source of profit is the sales of Fengyoujing.

On the premise of continuous operation on the valuation base date of December 31, 2023, the book value of Shuixian Pharmaceutical's owner's equity is 631 million yuan. The valuation using the income method is 956 million yuan, with an increase of 325 million yuan and an appreciation rate of 51.47%.

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, the two parties can carry out in-depth cooperation in the fields of brand, marketing, channels, etc., increase sales revenue, expand market share, and further enhance market competitiveness.

In 2022 and 2023, Narcissus Pharmaceutical's operating income will be 283 million yuan and 308 million yuan respectively, and its net profit will be 35.0273 million yuan and 47.0082 million yuan respectively, with steady performance. In the above two years, cash dividends were 10 million yuan and 20 million yuan respectively. If the dividend situation remains stable, it will bring no less than 3 million yuan in dividend cash flow to Pien Tze Huang every year.

Top brand of Fengyoujing

"Narcissus Brand" Fengyoujing is the first bottle of Fengyoujing produced in my country and was put into production in the 1970s.

This small bottle of green liquid medicine has multiple effects such as cooling, analgesia, wind-repelling, and antipruritic, and is suitable for a variety of scenarios such as mosquito bites, headaches, dizziness, and motion sickness. In the early years, it was a must-have medicine for Chinese families.

With the development of China's pharmaceutical industry, Fengyoujing has been gradually replaced by floral water, mosquito repellent and other types of medicines, and the market size has gradually shrunk. Even so, in the Fengyoujing segment, Narcissus still has a strong position, with a market share of up to 50%. Last year, Narcissus Pharmaceuticals sold a total of 58.9786 million bottles of Fengyoujing.

It is understood that in Africa, Fengyoujing is a top social media brand and is regarded as the "Oriental Magic Oil" by locals. In March this year, the CCTV "Africans Looking at China" crew made a special trip to Narcissus Pharmaceuticals to interview, just to explore the secret of Narcissus brand Fengyoujing's continued strong sales in Africa.

Of course, for Pien Tze Huang, a "Chinese medicine giant" with an annual revenue of over 10 billion, a net profit of more than 2 billion, and a market value of over 100 billion, the current income, profit and dividend of Narcissus Pharmaceuticals are just a drop in the bucket. What it values ​​more is the future possibilities of this company.

In September 2022, the original shareholders of Narcissus Pharmaceuticals planned to jointly increase capital by 700 million yuan, which will be used specifically for the company's "withdrawal from the city and entry into the park", namely the expansion of the Fengyoujing workshop and the construction of new oral solid preparations and special medical food workshops. Through this project, while consolidating traditional Fengyoujing and other products, it is hoped that new ways of developing chemical oral solid preparations will be actively explored to achieve development and growth.

In the first half of that year, Narcissus Pharmaceuticals started cooperation with well-known pharmaceutical research and development institutions and commissioned the development of five oral solid products including sitagliptin metformin tablets.

According to research and demonstration, after the above-mentioned projects are completed and put into production, they can achieve an average annual sales revenue of 1.207 billion yuan and an average annual total interest rate of more than 200 million yuan.

However, nearly two years have passed, and the plan to move out of the city and into the industrial park has not yet been implemented. In addition, due to the broken capital chain of the entrusted R&D institution, disputes over the R&D contracts of multiple chemical drug varieties have arisen, resulting in slow overall progress of the project.

Pien Tze Huang hits growth bottleneck

Pien Tze Huang was once regarded as a "magic medicine" by the Chinese. Once upon a time, Maotai + Pien Tze Huang became a standard in some high-end drinking parties.

As a powerful tool for protecting and rescuing the liver, it has been endowed with too many halos: a national secret formula, a time-honored Chinese brand, a royal relic, and the king of liver disease medicines.

In fact, 70 years ago, Pian Zai Huang was just an ordinary product of the Zhangzhou Pharmaceutical Factory in Fujian. It was unknown, had no market, and was produced twice a year, with only a few dozen kilograms.

In 2005, the relevant state departments implemented control over natural forest musk deer resources, and medicines containing natural musk became scarce products. Pien Tze Huang, which uses natural musk as its main raw material, became popular instantly.

Scarcity makes things valuable. According to preliminary statistics, in the past 20 years, the price of Pien Tze Huang tablets has increased more than 20 times, and the market retail price of 3 grams of Pien Tze Huang tablets has increased from 325 yuan in 2004 to 760 yuan at present.

Under the dual effects of rising volume and price, Pien Tze Huang's performance has ushered in rapid growth. In the ten years from 2014 to 2023, the company's operating income soared from 1.454 billion yuan to 10.06 billion yuan; net profit attributable to the parent company increased from 429 million yuan to 2.797 billion yuan.

However, the situation this year is not optimistic.

Not long ago, the company disclosed its semi-annual performance report, achieving operating income of 5.65 billion yuan, a year-on-year increase of 11.99%; net profit attributable to shareholders of the parent was 1.72 billion yuan, a year-on-year increase of 11.61%.

This seemingly good midterm report card resulted in a 7.59% drop in the stock price that day. Why?

First, investors are not satisfied with the company's performance improvement. After vertical comparison, whether it is revenue or profit, the growth of Pien Tze Huang in the first half of this year is the lowest since the same period in 2016.

Especially in the second quarter, revenue growth has dropped to single digits, and net profit attributable to shareholders of the parent company has shown negative year-on-year growth for the first time in nearly seven years.