Core Viewpoint - Reap Bio plans to divest 48.4213% of its stake in Zhong'an Bio due to the latter's failure to achieve expected returns from a fundraising project and the company's shift towards the pet business [1][2][3] Group 1: Divestment Details - Reap Bio will transfer its controlling stake in Zhong'an Bio to Jiangxi Twin Biological Technology Co., with the transaction price set at 115 million yuan, reflecting a 15.3% premium on the overall valuation of 237 million yuan [2][3] - Zhong'an Bio, established in 2010, primarily produces livestock vaccines, with an annual production capacity of approximately 300 million doses [2] Group 2: Financial Performance - In 2024, Zhong'an Bio reported a revenue of 48.98 million yuan, down nearly 12% year-on-year, and incurred a loss of 459,600 yuan [3][8] - The net asset value of Zhong'an Bio was reported at 206 million yuan as of 2024 [2] Group 3: Strategic Shift - Reap Bio's divestment is part of a broader strategy to focus on its core business and mitigate losses from underperforming assets [3][6] - The company has been actively acquiring stakes in the pet industry, including a 15% stake in Zhongrui Huapu Technology for 131 million yuan, indicating a strategic pivot towards the pet supply chain [4][7] Group 4: Financial Risks - Reap Bio's short-term interest-bearing liabilities reached 862 million yuan in 2024, a 55% increase year-on-year, while long-term loans rose by 67% to 514 million yuan [5] - The company's asset-liability ratio increased from 27% to 37%, indicating growing financial leverage [5] Group 5: Profitability Challenges - In 2024, Reap Bio's net profit declined by 33.7%, attributed to rising raw material costs, increased R&D and financial expenses, and a significant drop in non-recurring gains [8] - The overall gross margin fell from 49.69% in 2023 to 41.38% in 2024, reflecting pressure on profitability [8] Group 6: Operational Concerns - Accounts receivable rose to 1.07 billion yuan, and inventory increased from 390 million yuan to nearly 500 million yuan, indicating potential liquidity issues [9] - The company's ability to successfully integrate and grow its pet business will be critical for its long-term performance amid current challenges [9]