Event: on October 18, Dongfeng announced that it planned to buy 51.06% of Shenzhen Bosheng New Materials by paying cash and issuing shares. After the completion of the transaction, the company will own 100% of Bosheng New Materials. In addition, on October 10, Dongfeng shares announced that it planned to sign an agreement with Huzhou Saize Private Equity Fund to jointly invest in the establishment of Hangzhou Sihan, with the main investment direction in new energy, energy storage, new materials and high-tech industries, of which the company contributed 40 million yuan. 99.75% of the total contribution.
It is proposed to acquire Bosheng new materials, increase the layout of new materials, and create the second growth curve. The company will continue to promote the strategic transformation of "increasing cigarette labels, expanding medicine packages, and adding sai Tao", and gradually extend the new material business based on the base film business in the new material business. focus on the layout of high-barrier and new energy materials and other high-growth track. The company has achieved initial results in the layout of new energy materials, developing products such as lithium battery diaphragm support and protective film, becoming the main supplier of lithium battery diaphragm production in Enjie, and distributing power batteries and energy storage diaphragm products through subsidiary Bosheng new materials. Bosheng new material is one of the few companies with 12 μ m dry diaphragm in China, which has entered the supplier system in the era of BYD and Ningde. The production capacity of Bosheng new materials continues to expand. By the end of June 2022, the production base in Hunan is basically full, and the production base in Yancheng, Jiangsu has entered the stage of trial production. Bosheng's new materials revenue has grown rapidly with the climbing of production capacity, and has turned into a profit in December 2021. At the same time, the company will carry out more cooperation with Bosheng new materials to further expand the product category and coverage of new materials and accelerate the transformation to a new energy track. In terms of high barrier membrane, the company plans to invest no more than 130 million yuan to build a new functional membrane material project in July 2022 to form a core product system based on recyclable high barrier materials.
The main business of Yanbiao is steady, and continue to promote the transformation of new business.
The company continues to consolidate the development of the main packaging industry, with the upgrading of the middle and high end of the downstream tobacco product structure, the company actively optimizes the product structure, 22H1 won a total of 18 tobacco standard projects. In terms of pharmaceutical packaging business, the company has increased investment around Class I pharmaceutical packaging materials industry, and the 120 million yuan pharmaceutical packaging hard film production project in Taixing, Jiangsu Province has been carried out smoothly, and plans to invest 500 million yuan in June 2022 to build an intelligent manufacturing base for high barrier pharmaceutical packaging materials in Changzhou, Jiangsu Province. At the same time, the company continues to open up new customers on the basis of existing high-quality customers such as Beijing Sinovel, Broad Biology and so on. By the end of June 2022, the company has expanded the customers of foreign pharmaceutical companies to AstraZeneca PLC and Fessen Yuskabi, and the business cooperation with Sanofi has provided samples and passed the trial run, and the business cooperation with Bayer has completed the supplier filing process.
Investment suggestion: the company's tobacco label business develops steadily and accelerates the transformation to a high value-added and prosperous track such as Class I pharmaceutical packaging materials and new materials, and the long-term development is expected. Without considering the factors of this merger and purchase for the time being, we expect Dongfeng's operating income from 2022 to 2024 to be 41.27,47.36 and 5.254 billion yuan, an increase of 8.47%, 14.75% and 10.94% over the same period last year, and the net profit of its parent is 6.18,7.02 and 838 million yuan, up-21.34%, 13.67% and 19.39% over the same period last year, corresponding to 14.1x, 12.4x and 10.4x of PE.
Risk hints: the risk of substantial fluctuations in raw material prices; the risk that new business growth is less than expected; the risk that HNB policy regulation is more stringent than expected; the risk of repeated epidemics; and the risk that capacity construction is less than expected.