Shineco Enters into a Letter of Intent with Meitong Technology to Address China’s Aging Population

Rhea-AI Summary

On June 18, 2024, Shineco signed an Investment Letter of Intent to invest $20 million in Beijing Oriental Meitong Technology in exchange for 80% of its shares. Shineco anticipates that this acquisition will enhance its core competencies and generate synergies, thus increasing the company's value. Meitong Technology, a durable medical equipment provider, serves over 12 million patients through partnerships with more than 800 hospitals in China. The company has an annual cash flow of nearly RMB 600 million. It plans to expand its market to nursing, home medical, and funeral equipment and aims to increase its domestic hospital clients to 1,500 within three years. With Shineco's support, Meitong Technology also targets a 20% increase in overseas sales within the same period. The collaboration aims to utilize data for accurate market analysis and product development, enhancing customer satisfaction and loyalty.

Positive

• Shineco's $20 million investment in Meitong Technology aims to acquire 80% of its shares, indicating a significant expansion strategy.
• Meitong Technology operates with an annual cash flow of nearly RMB 600 million, showing financial robustness.
• Meitong Technology has partnerships with over 800 hospitals and serves more than 12 million patients, indicating a strong market presence.
• Shineco anticipates synergies from the acquisition, which could enhance its core competencies and value proposition.
• Meitong Technology aims to expand to nursing, home medical, and funeral equipment markets, diversifying its product lines.
• The partnership aims to increase Meitong Technology's domestic hospital clients to 1,500 within three years.
• With Shineco's resources, Meitong Technology targets a 20% increase in overseas sales within three years.

Negative

• The success of the investment is contingent on Meitong Technology meeting specific net income growth benchmarks and registering at least two new technology patents, adding risk to the investment.
• The $20 million investment could strain Shineco's financial resources if the expected synergies and market expansions do not materialize.

Insights

Financial Analyst

The announcement of Shineco's intention to invest $20 million in Meitong Technology is significant for several reasons. First, the acquisition of an 80% equity stake in a company with an annual cash flow of nearly RMB 600 million suggests potentially positive financial implications. Shineco's strategic move aims to diversify its revenue streams and tap into China's growing demand for durable medical equipment.

For investors, it's important to understand that such an investment could enhance Shineco's revenue and profitability in the long term, especially given Meitong Technology's established presence in over 800 hospitals and its service to more than 12 million patients. The anticipated growth in the number of hospital customers and the expansion into international markets further underscores the potential for revenue expansion.

However, investors should also consider the risks. The benchmarks for net income growth and the requirement for new technology patents are ambitious and could pose challenges. Additionally, integrating Meitong Technology’s operations with Shineco's current business structure could encounter hurdles, which might impact short-term financial performance.

Market Research Analyst

The partnership between Shineco and Meitong Technology addresses a critical demographic shift in China—its aging population. The demand for durable medical equipment and home healthcare services is expected to rise, providing a fertile ground for growth. Meitong Technology's intelligent management system, which customizes medical equipment to user needs, offers a competitive edge in this burgeoning market.

From a market perspective, the plan to increase domestic market share and the ambitious target of boosting international sales by at least 20% over three years are promising. The synergy between Shineco’s existing data on elderly care needs and Meitong Technology’s product offerings could lead to unique, market-leading innovations.

However, the market is highly competitive and achieving the projected growth targets will require effective execution. Investors should watch for updates on customer base expansion and new product developments closely, as these will be key indicators of success.

Healthcare Industry Expert

Shineco's decision to invest in Meitong Technology aligns well with the ongoing transformation in China's healthcare sector. The focus on providing a variety of shared medical products, such as wheelchairs and hospital beds, is important in a country with an aging population. The integration of an intelligent management system to coordinate supply and demand further enhances efficiency and service quality.

The collaboration will likely facilitate innovations in patient care, potentially improving outcomes and satisfaction. The expansion into nursing, home medical and funeral equipment is a strategic diversification that caters to a broad spectrum of elderly care needs.

Nevertheless, the success of this investment will depend on how well Shineco and Meitong Technology can integrate their operations and leverage their combined data for market analysis and product development. Ensuring seamless integration and maintaining operational efficiency will be critical for achieving the anticipated synergies and growth.

BEIJING, June 20, 2024 (GLOBE NEWSWIRE) -- Shineco Inc. (“Shineco” or the “Company”; NASDA: SISI), a producer of innovative diagnostic medical products and related medical devices announced today that on June 18, 2024, it entered into an Investment Letter of Intent (the “Investment LOI”) with Beijing Oriental Meitong Technology Co., Ltd. (“Meitong Technology”) whereby Shineco intends to invest $20 million in Meitong Technology in exchange for 80% of Meitong Technology’s shares. The Company believes that the acquisition of equity in Meitong Technology will add to the Company’s core competencies and result in operating synergies that will enhance the Company’s value proposition.

Meitong Technology is a durable medical equipment company that specializes in providing a variety of shared products to hospitals, healthcare facilities and patients in their homes. Its intelligent management system enables it to coordinate the supply and demand of its shared medical products, including wheelchairs, hospital beds and power banks, all of which can be customized to its customer’s needs. Meitong Technology has business relationships with more than 800 hospitals in China across the country’s provinces and cities and has more than 10,000 equipment units put into use, serving more than 12 million patients. Meitong Technology has an annual cash flow of nearly RMB 600 million.

The acquisition of 80% of Meitong Technology’s equity is in line with Shineco’s long-term strategy to grow its cash flow, expand its business, and increase its corporate valuation. As part of its growth plan, Meitong Technology plans to enter the nursing, home medical and funeral equipment and medical supply rental market. In so doing, it intends to achieve a brand matrix competitive advantage with a more diversified product line that includes more products and services available for patients. At the same time, Meitong Technology expects to further consolidate its domestic market share and increase the number of Chinese hospital customers from 800 to 1,500 within three years. In addition, with the resources of Shineco, Meitong Technology expects to enhance the share of its sales in the international medical institutions market and increase the proportion of overseas sales by no less than 20% within three years.

As both Shineco and Meitong Technology possess a large amount of data on the needs of the elderly and physically challenged people, the two companies plan to jointly utilize such data for the purpose of the accurate market analysis and product development, providing one-stop solutions in the areas of medical devices, healthy meals, rehabilitation care, etc., so as to better satisfy the market demand and enhance customer loyalty and satisfaction. Further, with Meitong Technology's extensive domestic channel resources, Shineco will have the opportunity to accelerate its expansion of the domestic and international markets and increase the market penetration and market share of its products.

According to the Investment LOI, if certain benchmarks of net income growth for Meitong Technology for the three years from 2025 through 2027 and the requirement to register at least two new technology patents are met, the Company will grant to Meitong Technology’s management team a cash reward of up to 1% of the investment amount (up to $200,000).

Jennifer Zhan, CEO of Shineco, said, “We are pleased to make this strategic investment since we believe that as China's elderly population continues to grow, there are excellent growth opportunities for established companies such as Meitong Technology, and we are keen to participate in such growth. Also, we believe that there will be synergies that will benefit both of our companies and facilitate the expansion of Shineco’s market share in several key markets. We look forward to working with Meitong Technology to see our value proposition become further realized in the market.”

About Shineco, Inc.

Shineco Inc. (“Shineco” or the “Company”) aims to ‘care for a healthy life and improve the quality of life’, by providing safe, efficient and high-quality health and medical products and services to society. Shineco, operating through subsidiaries, has researched and developed 33 vitro diagnostic reagents and related medical devices to date, and the Company also produces and sells healthy and nutritious foods. For more information about Shineco, please visit www.biosisi.com/.

Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “could”, “intend”, “expect”, “plan”, “budget”, “forecast”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue”, “evaluating” or similar words. Forward-looking statements should not be relied upon because they are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Examples of forward-looking statements include, among others, statements we make regarding the innovativeness and market position of our products and services, our competitive strengths, and our expectation that the healthy meals replacement joint venture will be a competitive products in its field. You are cautioned not to rely on any forward-looking statements. Actual results may differ materially from historical results or those indicated by the forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with the Company’s ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the ability to obtain all necessary regulatory approvals in the jurisdictions where it intends to market and sell its products the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulations, economic conditions, the impact of the COVID-19 pandemic, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in its filings with the Securities and Exchange Commission. The forward-looking statements in this press release are based only on information currently available to us and speak only as of the date of this press release, and Shineco assumes no obligation to update any forward-looking statements except as required by the applicable rules and regulations.

For more information, please contact:
Shineco,Inc.
secretary@shineco.tech
Mobile: +86-010-68130220

Precept Investor Relations LLC
David J. Rudnick
david.rudnick@preceptir.com
Mobile: +1-646-694-8538

FAQ

What is the recent investment news about Shineco?

Shineco announced a $20 million investment in Meitong Technology to acquire 80% of its shares.

How many hospitals does Meitong Technology currently partner with?

Meitong Technology partners with over 800 hospitals in China.

What is Meitong Technology's annual cash flow?

Meitong Technology has an annual cash flow of nearly RMB 600 million.

What are Shineco's plans for Meitong Technology's future?

Shineco plans to help Meitong Technology expand into the nursing, home medical, and funeral equipment markets, and increase its domestic hospital clients to 1,500 within three years.

How will the Shineco investment impact Meitong Technology's overseas sales?

With Shineco's resources, Meitong Technology aims to increase its overseas sales by no less than 20% within three years.

What are the conditions for Meitong Technology's management to receive a cash reward?

The management will receive a cash reward of up to $200,000 if they meet net income growth benchmarks and register at least two new technology patents from 2025 to 2027.