January 17 -- China Resources Sanjiu Medical and Pharmaceutical (000999.SZ) plans to spend 600-700 million yuan to bid for a 99.83 percent stake in Shandong Shunfeng Pharmaceutical in order to build up its leadership position in the medicated skin care market and to optimize its product mix, reports Shanghai Securities News, citing a company filing.

According to the filing, the target company is one of the largest makers of medicated skin care products, and its products are sold under the brand name of “Shunfeng”, a well-reputed brand in Guangdong province.

Through end September, Shunfeng Pharma had net assets of 138.63 million yuan. It recorded net profit of 43.62 million yuan in 2010 on revenue of 208.11 million yuan.

During the first nine months of 2011, Shunfeng Pharma posted net profit of 23.73 million yuan on revenue of 153.69 million yuan.

The book value of Shunfeng Pharma hit 540.08 million yuan at end September, while it was assessed to have 401.45 million yuan of net assets.

However, it does not have an independent sales network, and had authorized Foshan Shunfeng Drugs Sales to sell its products.

The management of Shunfeng Pharma said it will rescind the agreement with Foshan Shunfeng Drugs Sales in 2012, and restructure its industry chain.

China Resources Sanjiu predicts Shunfeng Pharma will post earnings growth of eight percent in 2012, and 14 percent in 2013, while earnings growth will decline from 2014 to 2016.

Shares of the company rose 4.25 percent to trade at 15.22 yuan per share at 14:34 today.