1.351 Billion Yuan Divestiture Of "Income Cow" Business, Or Does Wanbond Layout Medical And Health Insurance Leap?

Since May this year, wanbond (002082. SZ), which has not been covered by securities companies for more than ten years and has a market value of less than 10 billion, has suddenly become popular. It has disclosed investor research activities for four times, and the corporate image of the "medical big health industry" has been growing.

It is disturbing that, not long ago, on June 17, Wan Bangde received the regulatory attention letter issued by Zhejiang securities regulatory bureau, asking about the situation of Zhejiang kangci Medical Technology Co., Ltd. (hereinafter referred to as "kangci medical") that it acquired failed to fulfill its performance commitment in 2020, and urged the performance commitment party to fulfill the performance compensation obligation as soon as possible.

Kangci medical is just a microcosm of medical and health layout of wanbond.

In the past four years, wanbond has completed a series of capital operations: it has successively acquired 51% equity of wanbond Medical Technology Co., Ltd. (hereinafter referred to as "wanbond medical") and 80% equity of Zhejiang kangci Medical Technology Co., Ltd. (hereinafter referred to as "kangci medical"), and put 100% equity of wanbond group's core asset into the listed company in February 2020, The company's business has been transformed to "medical devices" and "pharmaceutical manufacturing".

In March this year, wanbond sold 100% of its aluminum processing assets Dongliang Aluminum Industry Co., Ltd. and 51% equity of Huzhou Jiacheng metal coating Co., Ltd. for 1.351 billion yuan.

Affected by the retroactive accounting adjustment, the net profit of wanbond in 2019 is 255 million yuan, which is 112 million yuan less than before; From January to July 2020, the net profit of wanbond will change from 45.5323 million yuan to 22.6456 million yuan.

From this point of view, divestiture of traditional business has a more obvious impact on wanbond's profitability.

Nevertheless, wanbond is still committed to the layout of the medical and health industry. Is this a thrilling leap?

1.351 billion yuan to divest "income Dairy" business

Before the asset sale, wanbond's main business was divided into four parts: first, pharmaceutical manufacturing; Second, medical device business; Third, aluminum processing business plate; Fourth, nonferrous metals trade business.

In March 2021, wanbond sold 100% of Dongliang aluminum and 51% of Huzhou Jiacheng to the related parties of Zhao Shouming and Zhuang Hui, the actual controllers of the listed company, with RMB 1.351 billion.

For the sale, wanbond explained that the rapid development of "multi main business" needs to consume a lot of resources to support, so it is better to be refined and strong.

According to the sales plan, in the first half of 2020, the company's aluminum processing plate's revenue was 1.186 billion yuan, the gross profit was 151 million yuan, the non-ferrous metal trading business income was 4.863 billion yuan, and the gross profit was 30.1209 million yuan. The revenue of aluminum processing and non-ferrous metal trade accounted for 90.33% and the gross profit accounted for 32.17%.

According to the annual report of the company in 2020, wanbond's "nonferrous metal processing" achieved a revenue of 2.866 billion yuan, accounting for 20.92%; the "non-ferrous metal trade" achieved a revenue of 9.327 billion yuan, accounting for 69.07%; the two businesses together accounted for nearly 90%.

In terms of gross profit rate, in 2020, the gross profit rate of "non-ferrous metal processing" is 12.62%, while that of "non-ferrous metal trade" is only 0.35%.

Wan bond believes that the medical industry is expected to maintain a high degree of prosperity in the medium and long term, so it will maintain a large scale of investment in fixed assets, R & D funds and working capital in the future. However, the overall industry of aluminum processing has great competitive pressure, which puts forward higher requirements for the company's personnel energy and production and operation funds, so it chooses to sell aluminum processing business.

The first quarter report of 2021 shows that the performance of wanbond will decline sharply, with the revenue of 77.27% and the net profit of 42.32% year-on-year. In this regard, the company's explanation is that the stripping of aluminum processing business and the suspension of Shanghai Xingdong aluminum trading business led to fluctuations in the company's data in the first quarter of 2021.

"Divestiture of aluminum processing business in the short term will certainly have an impact on the company's performance, but it also depends on the firm determination of the company to transform medical care and the quality of its medical assets," a person concerned about the M & a market pointed out to the reporter of the 21st century economic report.

The profitability of "medical assets"

Wanbond has placed a number of medical assets, and its profitability is worthy of attention.

First of all, we're going to look at wambond medical.

According to the announcement, the main business of wanbond medical is orthopedic implant device business, medical equipment and hospital engineering service, and medical polymer products business.

At present, wanbond medical has completed the three-year performance gambling: from 2017 to 2019, the non net profit of wanbond medical was 33.8367 million yuan, 49.7334 million yuan and 65.5969 million yuan, respectively, which achieved 102.54%, 103.61% and 102.50% of the predicted profit of this year.

However, it is worth noting that the profitability of wanbond medical will decline significantly in 2020.

According to the annual report of wanbond in 2020, the net profit of wanbond medical in that year was only 1.309 million yuan, less than 2% of non net profit was deducted in 2019.

Second, look at wanbond.

Wanbond pharmaceutical is mainly engaged in the R & D, production and sales of modern traditional Chinese medicine, chemical raw materials and their preparations. It is characterized by natural plant drugs, mainly used for cardiovascular and nervous system, and covers respiratory system, mental system, digestive system and other fields. It has two core products with full intellectual property rights, namely, huperzine a raw material and injection, which is the first in the world, and Ginkgo biloba dropping pills, an exclusive Chinese medicine protected variety in China.

Wanbond completed the acquisition of 100% equity of wanbond pharmaceutical in January 2020, and the performance commitment Party promised that the non net profit deducted by wanbond pharmaceutical from 2019 to 2022 will be no less than 184.5 million yuan, 226.5 million yuan, 263.8 million yuan and 312.5 million yuan respectively.

At present, the performance commitment of wanbond pharmaceutical in the first two years has been achieved: in 2019, the non net profit deducted by wanbond pharmaceutical was 191 million yuan, accounting for 103.36% of the predicted profit of that year; In 2020, the non net profit deducted will be 235 million yuan, accounting for 103.59% of the performance commitment of that year, which is a relatively outstanding asset of listed companies.

Third, look at another medical asset of wanbond, kangci medical.

Kangci medical mainly produces orthopedic medical devices, mainly including non fusion elastic rod spinal internal fixation system, cervical lumbar interbody fusion cage, vertebral balloon dilatation system, external fixation support system, multi-functional comprehensive operating table, ultrasonic bone injury treatment instrument, broken nail removal kit, absorbable suture, disposable wound pulse flushing system, CPM joint function rehabilitation device, etc Medical sterilizer, pre vacuum disinfection box and other orthopedic basic surgical instruments and other product series.

Wanbond acquired kangci medical in July 2018, and the other Party promised that the audited non net profit of kangci medical in 2018, 2019 and 2020 was no less than 13.5 million yuan, 17.55 million yuan and 21.9375 million yuan respectively.

However, contrary to our wishes, kangci medical only fulfilled the performance commitment in 2018, and then repeatedly broke the appointment.

In 2019, the non net profit deducted by kangci medical was 12.6238 million yuan, accounting for 71.93% of the performance commitment; In 2020, the non net profit of kangci medical was 9.7307 million yuan, only 44.36% of the performance commitment was fulfilled.

As for the decline of the performance of kangci Medical Co., Ltd., in reply to the inquiry letter of 2020 annual report, wanbond said that the main business income of kangci medical includes the income of independent production and the income of agent sales. The growth level of the income of independent products in 2019 is lower than that of the previous year, but the growth trend is still maintained; The decline of agency products is mainly due to the fact that there is no increase in incremental customers of enterprises in 2019, the income mainly comes from old customers, and there is little export business in 2019, which is mainly concentrated in the domestic market, resulting in the decrease of revenue in 2019. Affected by the epidemic situation in 2020, the first half of the year will be shut down and production will be stopped. In addition, the relevant orthopedic surgery in the hospital will be stopped. As a result, the income of main products and agency products of the enterprise will decline compared with that in 2019, resulting in the decline of sales performance in 2020.

It is worth mentioning that on March 30, 2020, wanbond plans to purchase the remaining 49% equity of wanbond medical with 530 million yuan in cash, which also encountered twists and turns, and finally decided to terminate the acquisition of the transaction.

Goodwill impairment risk

In addition to the performance commitments of several medical assets failing to meet the standards, wanbond has started to carry out goodwill impairment on both wanbond medical and kangci medical, causing market concern.

In 2020, wanbond will make a provision for impairment of RMB 53.3548 million and RMB 21.0432 million for wanbond medical and kangci medical respectively.

In response to this, in response to the inquiry letter of Shenzhen Stock Exchange's 2020 annual report on the evening of June 22, wanbond said, "due to the impact of uncontrollable factors such as the epidemic situation on the economic development at home and abroad and the pharmaceutical industry, the medical device business of wanbond medical and its South African subsidiary will gradually recover in the second half of 2020, especially the implantable orthopedic devices, the medical device business of wanbond medical and its South African subsidiary will gradually recover in the second half of 2020 Medical equipment and hospital engineering services have the greatest impact. The downward trend of operating profit in the third quarter of 2020 has not changed, which is obviously lower than the expectation when goodwill was formed. The company conducted impairment test on July 31, 2020 and December 31, 2020, and made provision for goodwill impairment. "

Coincidentally, regarding the goodwill impairment of kangci medical, Wan bond explained that "the growth level of independent product income of kangci medical in 2019 is lower than that of the previous year, but it still maintains the growth trend. The income of agency products mainly comes from old customers, and the export business in 2019 is very small, mainly concentrated in the domestic market, which leads to the decrease of revenue in 2019", "Affected by the epidemic situation in 2020, the first half of the year will be shut down and production will be stopped. In addition, the relevant orthopedic surgery in the hospital will be stopped. As a result, the revenue of main products and agent products of kangci medical will be decreased compared with that in 2019, resulting in a decline in sales performance in 2020.". Therefore, the company conducted impairment test on December 31, 2019, July 31, 2020 and December 31, 2020 and made provision for impairment of goodwill

It can be seen that under the background of substandard performance of relevant medical assets and impairment of goodwill, there is considerable uncertainty whether wanbond can guarantee the ability to continue as a going concern.

However, wanbond seems to be full of confidence. On June 4, the research institute stressed that "the company will focus on the development of big health industries such as pharmaceutical manufacturing and medical devices, and will focus on the extension of the industrial chain and the direction of business expansion. In combination with the needs of the company's own development, the company will not rule out the possibility of M & A in the future.".

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