Luoxin Pharmaceutical's cross-border acquisition completes the backdoor listing

On May 12, Dongyin announced that it officially renamed the stock abbreviation "Luoxin Pharmaceutical"-from today, Luoxin Pharmaceutical's cross-border acquisition and backdoor listing were officially completed.

And Dongyin's main business has undergone major changes, and it has transformed into the pharmaceutical manufacturing industry. Its main business is the research and development, production and sales of pharmaceutical products.

According to the data, Dongyin's main business was R & D, production and sales of well submersible pumps, small submersible pumps, and land pumps. Since today, Dongyin has officially transformed into a pharmaceutical manufacturing industry.

According to the announcement, the company agreed to change the company's Chinese name from "Zhejiang Dongyin Pump Industry Co., Ltd." to "Luoxin Pharmaceutical Group Co., Ltd." and the English name from "Zhejiang Doyin Pump Industry Co., Ltd." to "Luoxin Pharmaceuticals Group Stock Co., Ltd.", the stock abbreviation of the company was changed from "Dongyin Shares" to "Luoxin Pharmaceutical".

On April 28, 2020, the company obtained the "Business License" issued by the Zhejiang Provincial Market Supervision Administration, and the company's full name was changed to "Luoxin Pharmaceutical Group Co., Ltd."

The reason for this change comes from the major asset replacement implemented by Dongyin in 2019 and the issue of shares to purchase assets and related transactions, and the acquisition of 99.654% of Shandong Luoxin Pharmaceutical Group Co., Ltd. shares.

Several times to seek listing

Luoxin Pharmaceutical is one of the few cases where Hong Kong stocks have been successfully privatized and delisted from the market in recent years.

In 2001, the original Luoxin Pharmaceutical Factory was reorganized and reorganized into Luoxin Pharmaceutical. In December 2005, landed on the GEM of the Hong Kong Stock Exchange. However, from 2013 to 2015, because of the desire for a more active motherboard market, and in order to seek a higher valuation, Luoxin Pharmaceutical had submitted three applications for transfer to the Hong Kong Stock Exchange, but they were rejected.

In June 2017, Luoxin Pharmaceutical was delisted only by privatization: in March 2017, it received a privatization offer at a price of HK $ 17 per share, which is nearly 32% higher than the market price of the previous trading day prior to the offer. In June of that year, Luoxin Pharmaceutical completed its delisting, and its market value exceeded HK $ 10 billion.

The profitability of Luoxin Pharmaceutical has also received industry attention. In 2016, 2017, and 2018, Luoxin Pharmaceutical ’s net profit attributable to the owners of the parent company was 426 million yuan, 466 million yuan, and 512 million yuan, respectively.

Dongyin's 2019 results disclosed on the evening of January 16 show that the company expects to achieve attributable net profit of 620 million to 650 million yuan in 2019, a year-on-year increase of 456.82%-483.77%. This surge in performance is mainly due to the company's 2019 In December, the company completed the major asset replacement and the issue of shares to purchase assets and the transfer registration of the connected assets, and fulfilled the obligation to deliver the released assets. Luoxin Pharmaceutical became the company's holding subsidiary, and its operating performance was included in the company's merger. range.

But in general, Dongyin shares itself has relatively good profitability. In April 2016, the small and medium-sized board was listed. From the annual report, the company's revenue continued to grow, and the net profit of the mother for three years was more than 100 million.

Why did it decide to sell the shell? This may be related to the performance promise made by Luoxin Pharmaceutical. In the restructuring plan, Luoxin Pharmaceutical ’s net profit to be deducted from the non-returning mother will be no less than 550 million yuan, 650 million yuan and 750 million yuan in 2019, 2020 and 2021.

According to public information, in the first half of 2019, Luoxin Pharmaceutical's actual operating income was 3.93 billion yuan, accounting for 52% of the annual forecast; in the first half of 2019, Luoxin Pharmaceutical's actual realized net profit attributable to the owner of the parent company was 300 million yuan, accounting for 55% of the annual forecast.

Whether Luoxin Pharmaceutical can complete the performance promise in the restructuring plan in the future is worthy of further attention.

Opportunities and Challenges

The previous announcement disclosed that Luoxin Pharmaceutical has a total of 48 new drug certificates and 6 new drugs under research, mainly focusing on digestive, respiratory, anti-tumor products and other fields. Among them, the highest proportion of R & D projects is in the field of anti-tumor.

According to wind data, in 2018, there were 429 R & D personnel in Luoxin Pharmaceutical, and R & D investment accounted for 8.45% of operating income, which was higher than the average number of R & D personnel in the same industry and the proportion of average R & D investment in the same period in the same period.

Because of the consistent evaluation of generic drugs and the continuous implementation of new bidding rules, the trend of medical insurance funds to replace cages and birds is unstoppable. More and more innovative drugs are covered. Chinese pharmaceutical companies have increased their investment in innovative research and development. How to switch from mature products to innovative products. Therefore, growth-oriented pharmaceutical companies with innovative capabilities will be more favored in the capital market.

It should be noted that from the perspective of product progress, Luoxin Pharmaceutical has more than 90 research projects, including 28 major research products. However, as far as the company ’s research projects are disclosed, the company ’s self-developed new drugs still have a certain distance from commercialization-many of the company ’s first-class innovative drugs are in pre-clinical or clinical phase one, and will be truly listed and profitable in the future. There are also greater risks and uncertainties.

In addition to innovative products, some of the company ’s products on sale also have a problem of decreasing market share: Luoxin Pharmaceutical ’s annual report shows that the company ’s relatively high market position in digestive and respiratory systems and other specialty medicines is the main revenue, and contribute The trend of growth; meanwhile, due to factors such as anti-resistance policies, the growth of antibiotic drugs has slowed down significantly, and the market share has also declined.