Events:
The company announced that the "Qinghai Huading Major issues suspension notice" was issued on June 17, 2014, during which the company planned a private additional offering, which has been decided by the board of directors and will resume trading on July 2, 2014.
Comments:
The company plans to issue no more than 202 million RMB common shares and raise no more than 1.08878 billion yuan. After deducting the relevant issuance fees, the company will be used to repay about 568.5 million yuan of bank loans, and the rest will be used to supplement liquidity.
Contribute to the strategic transformation of the company. The company's industrial structure has been transformed to the direction of precision, large-scale, performance-based and specialization. the company has carried out the upgrading and renovation projects of heavy and large CNC machine tools such as railway special machine tools in Xining equipment Park and the construction project of Suzhou Jiangyuan R & D base. The R & D expenditure in 2012 and 2013 was 31.8427 million yuan and 31.7225 million yuan respectively, and supplementary liquidity is needed to help upgrade and optimize the product structure in the future. This issue will help the company to continue to maintain and strengthen research and development, and maintain the company's domestic leading position in the industry technology.
Financial costs have been reduced. After the funds raised in this non-public offering are used to repay the loan and replenish the working capital, the company's interest expense will be reduced. If measured at the benchmark one-year loan interest rate of 6%, the company can save about 34.11 million yuan in interest expenses per year. Further enhance the company's profitability.
The pressure on cash flow has been greatly alleviated. Part of the funds raised will be used to supplement the working capital, which will help to meet the needs of the company's business development and indirectly increase the cash flow generated by the company's operating activities. Further optimize the company's capital structure. As of March 31, 2014, the company's asset-liability ratio was 63.66%, and liabilities accounted for a high proportion of total assets. This issue will enhance the company's profitability and anti-risk ability, and enhance the company's financing ability.
The equity is further dispersed. The shareholding proportion of Qinghai heavy in the company, the controlling shareholder, changed from 21.11% to 11.39%, with 28.03% of voting rights.
Risk Tip: this non-public offering plan still needs to be examined and approved by the general meeting of shareholders of the company, examined and approved by Qinghai SASAC and approved by China Securities Regulatory Commission. Investors are asked to pay attention to the risks. Rating: we expect the company to earn 0.03,0.26 and 0.38 yuan per share from 2014 to 2015, giving the company a "buy" rating based on the closing price of 6.06 yuan on July 1, 2014, corresponding to 182,23 and 16 times PE, respectively.
