China Resources Group wants to gradually divest medical equipment business

Recently, Dongya Ejiao Co., Ltd., one of the core subsidiaries of China Resources Group (hereinafter referred to as “East E-Jiao”), announced that it intends to transfer 36% of its shares in accordance with the company’s development strategy of focusing on blood, nourishing and health care business. Ejiao Ahua Medical Devices Co., Ltd. (hereinafter referred to as "Ahua Medical Devices").

Since 2014, China Resources Group has sold and transferred the shares of China Resources Wandong and Shanghai Medical Devices Group. After the transaction is completed, China Resources will completely withdraw from the medical device field.

In this regard, industry insiders said that China Resources Group gradually stripped the medical device business, and its bearishness is self-evident. However, in fact, as one of the fastest growing pharmaceutical segments in recent years, medical devices have far-reaching implications for the comprehensive development of large pharmaceutical groups. The China Resources Group has voluntarily given up this "golden egg", which may be a strategic mistake.

Discard medical equipment

The "Announcement" pointed out that "Dong A Ejiao Ahua Medical Devices Co., Ltd. is a shareholding company of Dong'e Ejiao Co., Ltd. with a registered capital of 333.33 million yuan. Its main business is glass thermometer, electronic thermometer, electronic sphygmomanometer , blood glucose meter, medical The production and sales of plasters and medical adhesive plasters, the company's shareholding ratio is 36%. According to the development strategy of Dong'e Ejiao focusing on blood, nourishing and health care business, it is planned to dispose of the medical device equity and realize the strategic exit of non-main business." At the same time, Dong'e Ejiao “according to the net asset valuation value under the income method as the basis for the equity transfer pricing, according to the company’s 36% of the medical device equity, the transfer price is 295.854 million yuan, and the final transaction price will be based on the property rights exchange. The price of the investor's delisting shall prevail."

The relevant person in charge of Dong'e Ejiao told the author that “Ahua Medical Devices and Dong'e Ejiao are less relevant in the main business, and the medical equipment equity will be disposed of after the board of directors reviewed and approved.”

According to the data, the listing transfer is not the first time that Ejiao intends to sell Iowa medical devices. As early as the beginning of 2010, Dong'e Ejiao had logged out of the information transfer of Ahua Medical Devices in the Beijing Stock Exchange. At that time, Dong E Ejiao also held a 60% stake in Iowa Medical Devices. At that time, the listing price was 16.8442 million yuan, and the reason for the transfer was also the non-main business exit. However, according to public reports at the time, Dong'e Ejiao explained that the overall strategy of Iowa Medical Devices in the controlling shareholder China Resources Corporation belongs to the scope of Dong'e Ejiao withdrawal.

Shi Lichen, head of Beijing Dingchen Medical Management Consulting Center, believes that “Ahua Medical Devices is a chicken rib for Dong'e Ejiao. Because Dong'e Ejiao's flagship product is health care products, and Iowa Medical Devices is the main medical device. The significance of the operation of Dong'e Ejiao is not significant. At the same time, state-owned enterprises have a special feature--focusing on the scale effect of the business. Iowa's medical equipment is small in scale, and its main business is different from Dong'e Ejiao. Therefore, China Resources wants to transfer its equity. In the sense."

The data given in the "Announcement" seems to support the views of Shi Lichen. According to the "Announcement", the operating income of Ahua Medical Devices in the past three years was 142.648 million yuan (2015), 13999.75 million yuan (2014), and 123.8790 million yuan (2013); its net profit was 16.9064 million yuan (2015). Year), 20,870,500 yuan (2014), 14.649 million yuan (2013). This size is almost insignificant compared to Dong'e Ejiao. According to the first quarter report of Dong'e Ejiao in 2016, in the first three months of this year alone, Dong'e Ejiao's operating income reached 1.48 billion yuan, and the net profit attributable to shareholders of listed companies was 544 million yuan. Ahua Medical Devices does not have a scale effect, and the transfer of its equity will not have any material impact on the operation of Dong'e Ejiao.

Although it has nothing to do with Dong'e Ejiao, Ahua Medical Devices is the only remaining medical device manufacturer of China Resources Group.

In December 2011, China Resources Group acquired a 49% stake in Beijing Pharmaceutical Group Co., Ltd., and with the 51% stake previously held, China Resources Group completed the overall acquisition of Beijing Pharmaceutical. A direct consequence of the transaction was that Wandong Medical, a subsidiary of Beijing Pharmaceuticals, was also “successful” to China Resources. Later, Wandong Medical, which was renamed “China Resources Wandong”, and the Shanghai Medical Device Group, which was originally owned by China Resources Group, formed the medical device segment of China Resources at that time. However, the "love" between the two sides is difficult. In 2014, China Resources Group sold and transferred the above two companies. The takeover was Yuyue Technology, the controlling shareholder of Yuyue Medical. The explanation given by China Resources Group was “strategic withdrawal from medical device business”.

Regarding whether China Resources Group completely withdraws from the medical device field, the relevant person in charge of Dong'e Ejiao stated that “the strategic decision content at the controlling shareholder level, the listed company could not answer relevant questions.” China Resources Group did not respond to the author's interview request.

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