This report is read as follows:
The company plans to purchase 51.145% of the shares of Shengjiu Forgings by issuing shares and paying in cash, making it a wholly-owned subsidiary. The transaction is expected to reduce the company's financial costs, improve profitability, and enhance the competitiveness of the company's products in the long run.
Main points of investment:
Investment suggestion: recently, the company announced that it intends to purchase its 51.145% equity stake in Shengjiu Forgings by issuing shares and paying cash from Shengchuang New Materials Fund, Chirui Investment, Gandao Ronghui and Fan Weihong. At the same time, the company plans to raise no more than 350 million yuan to pay for the cash consideration and replenishment of this transaction. Taking into account the lower-than-expected installation in the second half of 2022 and the delay in forging production capacity construction, the company's EPS in 2022-24 was reduced to 1.38,2.27,3.02 (- 0.59) yuan, and the target price was reduced to 94.31 yuan (- 19.77) yuan to increase holdings.
Issue shares to pay 729 million, the actual controller has not changed. The valuation of the underlying 100% equity is based on 1.9 billion yuan, the value-added rate is 74.16%, and the underlying asset trading price is 972 million yuan, of which the issued shares pay 75% consideration (729 million yuan), and the corresponding number of shares is 15.62 million shares. After the completion of the transaction, the combined shareholding proportion of Xiao Zhengqiang and Xiao Gaoqiang dropped to 37.70%, which is still the actual controller of the company.
The transaction is expected to reduce the company's financial costs and improve profitability. In December 2020, the counterparty's capital increase for Shengjiu forgings is a capital increase with a buyback clause, which is accounted for as a financial liability in the company's consolidated statement, and financial expenses are calculated every year; this transaction can reduce the amount of financial liabilities of listed companies, reduce financial expenses, and enhance the profitability of listed companies. After the completion of the transaction, the company's net profit increased by 39 million in the first three quarters of 2022, and the net interest rate increased by 2.0pct. Shengjiu has the technological advantages of large and high-end forgings, and the synergy effect of M & An is significant. Shengjiu has the production capacity of large, special-shaped, high-end and large-scale forgings, and has strong technological advantages. Shengjiu's gross profit margin reached 15.54% in the first three quarters of 2022, which is higher than the average of 4.05pct in the same industry. Its ring mill can produce large ring forgings with a diameter of 12 meters, which is expected to enhance the competitiveness of the company's large megawatt bearing products.
Risk hint: the progress of mergers and acquisitions, capacity construction can not wait for expectations, wind power installation has dropped sharply.