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Kelun Pharmaceutical (002422): Announcement of Rights Issue Plan to Improve Financing Structure

Kelun Pharmaceutical (002422): Announcement of Rights Issue Plan to Improve Financing Structure
The event company announced that the 2019 issuance plan for the rights issue will be implemented by placing shares to the original shareholders, with no more than 1 for every 10 shares.The ratio of 4 shares is placed to all shareholders.The size of the funds to be raised in this rights issue does not exceed RMB 20 million (including the issuance expenses), which is used for repayment after deducting the issuance expenses, repayment of debts and debts and supplementary working capital.The controlling shareholder of the company, the actual controller has issued a commitment to fully subscribe for its shares that can be placed in cash. Opinions directly save financial costs. It is expected that the company ‘s scale-income company will raise 2 billion yuan to supplement working capital, which will directly save financial costs. Considering the current one-year valuation of the company ‘s public debt financing costs at 4%?5%, the company’s debt in 2018 is about 110 trillion, and the fractional expenditure is 6.3 ppm, with an average cost of 5.7%, it is expected that after the completion of the fundraising, the company will give priority to repaying debts with higher interest rates, which will directly save financial costs of more than 100 million US dollars and increase company profits.The pricing principle of the rights issue is based on the average price of the company’s stock 20 days before the release of the rights issue statement, and the market price discount method is used to determine the rights issue price. The final rights issue price will be determined after the company obtains the approval document from the CSRC.The forecast is estimated at 26 times, and we believe that there will be a slight increase in expected earnings.At the same time, the large shareholders’ full subscription of the placing shares also shows their confidence. Improving the balance sheet will help improve the company’s credit rating and save long-term interest costs. After the fundraising is completed, the company’s net assets will exceed $ 15 billion and the balance sheet will be improved.The credit rating is expected to be upgraded to AAA, and the financing cost is expected to drop by 20bp-50bp, which is expected to further save interest costs.With the increase in the proportion of direct financing, we believe that the company’s long-term income and expenditure will show a downward trend. The research and development funds are sufficient, optimistic that the company’s formulation transition company’s research and development expansion is redundant.Since 2013, the company’s R & D investment has exceeded US $ 3.8 billion, and high-barrier product transformation is gradually taking shape.Among them, 2018 was allocated for R & D11.140,000 yuan, an increase of 31 in ten years.74%, 18 varieties were approved for production in 2018, involving 7 major areas including parenteral nutrition, anesthesia and sedation, central nervous system, and anti-infection. 8 new target drug researches and 14 clinical researches on innovative drugs were launched.The escital oxalate oxalate tablets have won the bid for national 厦门夜网 centralized mining and are expected to achieve rapid volume.We are optimistic about the company’s formulation conversion.It is estimated that the company’s formulation business will achieve a net profit of approximately 200 million yuan in 2019. Earnings forecast and investment rating do not take into account changes in equity and financial costs brought about by this rights issue. We estimate that the net profit attributable to the parent for 2019-2021 will be 15 respectively.700 million, 19.600 million, 23.20,000 yuan, the growth is 30%, 25%, 18%, corresponding to EPS is 1.09, 1.37 and 1.61 yuan / share.The company is stable above the leader in large infusions and antibiotic intermediates, and at the same time, generic drugs have entered the mass-market stage.Maintain BUY rating. Risks suggest that the price of APIs fluctuates; 杭州夜网论坛 the progress of drug registration is not up to expectations; the price of generic drugs is lower than expected