Matters
King Kong Glass issued a restructuring announcement that the company plans to buy 100% equity of digital marketing company Nanjing Hans Digital Interconnection Culture Co., Ltd. (referred to as "Hans Internet") for 500 million yuan. King Kong Glass will pay 263 million yuan in cash for this restructuring; the remaining 243 million yuan will be paid in the form of shares, with an issue price of 7.23 yuan per share, for a total of 33.5934 million shares. At the same time, the company raised 168 million yuan for the cash payment of the acquisition. As of the end of April this year, the evaluation showed that the 100% equity estimate of Hans Internet was about 510 million yuan, compared with a net book asset of 108 million yuan in the same period, an appreciation rate of 372.22%.
Main viewpoints
Profits decline, mergers and acquisitions of Internet quality genes, short-term enhance the overall profitability. The performance of King Kong Glass has continued to decline in recent years, with net profits of 27.29 million yuan in 2012, 11.68 million yuan in 2013 and 5.82 million yuan in 2014, down 38.6%, 57.2% and 28.4% respectively from the same period last year. Hans Interconnection mainly focuses on holographic multimedia interactive digital display and mobile operation. The company's main business is developing rapidly, and its profitability is obviously stronger than that of King Kong Glass. The net profit in the first quarter of this year reached 13.37 million yuan, which is higher than the annual net profit of King Kong Glass in 2013. At the same time, Han Technology promised net profit of 42 million yuan, 55 million yuan, 66 million yuan and 76 million yuan from 2014 to 2017. Corresponding to PE11.9/9.09/7.58/6.58 from 2014 to 2017. For the declining performance of King Kong Glass to absorb the Internet high-quality genes, the future will bring new profit points.
Layout smart cities, open up emerging markets, and achieve a win-win situation. King Kong Glass plans to lay out the field of smart city, and the core competence of Hahn's interconnected digital marketing experience is in line with the company's "smart city" development strategy. Internet digital marketing experience mainly refers to Hans interconnection through the core digital content creation, through the "holographic interactive projection" technology to achieve the "naked eye 3D" visual effect, combined with focus customized digital marketing content and software technology rendering, to 360-degree holographic projection, holographic sand table, roaming system and other 19 categories of products as the form of expression It aims to provide customers with visual impact marketing means in the fields of consumer electronics, real estate, finance, communications, exhibitions and competitions.
The cooperation between King Kong Glass and Hahn interconnection is reflected in two aspects: 1) the glass window inside the building and the street-facing glass facade outside the building may become a good display carrier of digital video information and bring more customer resources to Hann Technology. 2) King Kong Glass will integrate the advantages of the development and operation of Hans interconnected mobile APP to develop a mobile security monitoring system for customers to achieve the interconnection of security systems. It is optimistic in the short term and needs a competitive business model in the long run.
In the short term, it is optimistic that the transformation of the company from traditional industries such as smart city, the concept of smart city and the high quality performance of Internet companies will provide impetus for the short-term development of King Kong Glass. In the long run, in the face of the systematicness and complexity of the smart city, it remains to be seen whether the company's business model is competitive enough. after mergers and acquisitions, the company needs more in-depth cooperation to explore new business models. stable development can bring long-term benefits for the company.
Profit forecast and investment advice
We predict that the EPS of the company in 14-17 will be 0.06 shock 0.07 PE respectively. After the merger, taking into account the performance contribution of the merger and acquisition company and the dilution of additional shares, it is expected that the profit forecast of the company for the same period will be 0.22 shock 0.27 shock 0.32 shock 0.36 yuan respectively, and the company's current stock price will correspond to the same period preparation test 46, 37, 31 and 27 times, respectively, considering that the market space after the merger and acquisition is open. For new opportunities for performance improvement, we give a "recommended" rating.
Risk hint
The effect of acquisition on the original business promotion and profit model is uncertain; the construction of smart city is lower than expected.