Events:
330 million yuan for the acquisition of 68.24% stake in the palm of Feixun and its holding company
The company announced that Variety Technology, a wholly-owned subsidiary, intends to acquire 68.24% of each of Mingzhu Holdings, the holding company of Palm Flying and its VIE structure, for 330 million yuan. Palm Flying News is a VIE structure, including overseas parent company Mingzhu Holdings, domestic wholly-owned subsidiaries and Palm Flying News controlled by agreement. After the acquisition, Variety Technology will hold a 68.24 per cent stake in the entire asset package.
Acquire Pocket Flying News, cut into the field of mobile Internet games
Handheld Flying News, located as a large mobile online game developer, is one of the first enterprises in China to enter the field of mobile online game development, has rich experience in mobile online game research and operation, and has been widely recognized by the market with a number of classic games. At present, the company has developed more than 100 mobile games, successfully issued and operated more than 6 series of mobile online games, and created "Pearl three Kingdoms", "Wulin OL" and other star games.
The acquisition consideration corresponds to 9 times, 7 times and 6 times PE from 2014 to 2016, respectively.
Handheld Flying News achieved an income of 125 million yuan and a net profit of 41.43 million yuan in 2013. Palm Flying News made a performance commitment, based on the after-tax profit of the main business in 2013, an increase of 30% in 2014, that is, a net profit of 53.86 million yuan; a growth rate of no less than 25% in 2015 and 2016, that is, a net profit of 67.32 million yuan and 81.45 million yuan, respectively. The purchase consideration corresponds to 9 times, 7 times and 6 times PE from 2014 to 2016, respectively.
Profit forecast and valuation
It is estimated that the company's PES from 2014 to 2016 will be 0.26,0.43 and 0.53 yuan respectively, corresponding to 34 times, 21 times and 17 times PE from 2014 to 2016, respectively.
Risk hint
The market promotion is lower than expected and the acquisition integration is lower than expected.
