TECON(SZ:002100)2025-12-16 10:32Group 1: Acquisition Overview - TianKang Bio is acquiring 51% of Xinjiang Qiangdu Animal Husbandry Technology Co., Ltd., which retains 49% ownership, ensuring long-term interests are aligned [2] - Qiangdu has approximately 70,000 sows and is projected to produce 1.36 million pigs in 2024 and around 1.5 million in 2025 [1] - The acquisition is valued at 3.511 billion CNY, with the final agreed value set at 3.5 billion CNY, leading to an actual payment of 1.275 billion CNY after accounting for 1 billion CNY in unpaid profits [2] Group 2: Financial Structure and Performance - Qiangdu has maintained profitability for six consecutive years, even during the lowest pig prices in 2021 and 2023 [2] - The acquisition includes a performance commitment of at least 837 million CNY from 2025 to 2027, with a compensation cap of 534 million CNY if targets are not met [2] - The 1 billion CNY payable dividends will be distributed over five years, linked to annual performance, calculated at 70% of the annual profit [2] Group 3: Strategic Implications - The acquisition aligns with national policies to reduce breeding sows and does not involve new capacity or projects, facilitating rapid integration into the southern Xinjiang market [3] - By incorporating Qiangdu, TianKang Bio aims to significantly enhance its revenue and profit levels, supporting its "cluster-style" development strategy in the pig farming industry [3] - The deal is designed to optimize cash flow and reduce initial capital outlay by 510 million CNY, improving the cost-effectiveness of the acquisition [2]