Incident: The company issued an announcement, making it clear that the 12 parties to the dispute had reached a settlement with Jiechi Technology regarding the equity dispute. There was no proxy holding of 6.5 percent of Jiechi Technology's shares by Vert, and Jiechi Technology complied with the clear asset ownership requirements in the restructuring management measures.
Our comments on this are as follows:
The equity dispute was settled, the ownership of assets was clear; concerns about restructuring were eliminated. In January 2016, Baoxin Technology received a letter from a lawyer. The letter stated that it was commissioned by 12 people including Wang Jiaotong. The letter stated that Jiechi Technology did not pay dividends and share repurchase payments to the other party in accordance with evidence such as labor contracts, equity incentive agreements, etc., and requested Jiechi Technology to fulfill its payment obligations as soon as possible. In May 2016, according to letters of commitment issued by 12 parties to the dispute and related interviews, the 12 parties to the dispute reached a settlement with Jiechi Technology on the equity dispute. There was no proxy holding of 6.5 percent of Jiechi Technology's shares by Vert, and Jiechi Technology complied with the clear asset ownership requirements in the restructuring management measures.
Jiechi Technology: A pioneer in the online circulation of PCB waste, with a net profit market space of 20 billion dollars. 1) Online circulation of waste liquid, innovating BOO treatment mode. Currently, mainstream waste etching solutions are treated centrally. Only the copper in them is extracted, and no waste liquid can be reused. Jiechi Technology reuses PCB etching solution online; it avoids intermediaries through a model that provides equipment and services free of charge. Wastewater discharge meets standards, and copper recovery and waste liquid reuse are achieved at the same time, and environmental friendliness and economy are highlighted. For manufacturers, there is no need to buy etching solution (1,200-1,500 yuan/ton), and the economy is greatly improved. 2) Cooperate with PCB giants to quickly release results. The company's PCB project has installed equipment in companies such as Foxconn, South Asia, and Jinxiang. Jiechi Technology's gross profit margin is 30%, and the net profit margin is around 20%. Jiechi Technology received a 100% VAT refund on recycled copper. 3) The market space is huge: 4,000 PCB companies nationwide (based on 5 lines, a total of 20,000 PCB lines), 1 line has a net profit of 1 million a year, with a total net profit of 20 billion dollars. Currently, the company is the industry leader and can achieve a net profit of 2 billion dollars per year at 10% calculation.
Youzhi Technology is a leader in matrix traffic monitoring to solve traffic monitoring pain points. Air environment monitoring is specifically divided into concentration and flow monitoring. The issue of accuracy of flow monitoring is a pain point in the Ministry of Environmental Protection's implementation of double the levy of sewage charges and sewage rights transactions. The company initiated the acquisition of Youzhi in '13. Youzhi's matrix flowmeters solved the problem of inaccurate measurement of traditional leather hosting, and began to be vigorously promoted by the General Measurement Department of the Ministry of Environmental Protection in 2014. Currently, Guizhou, Ningxia, Liaoning and other places require the installation of accurate flow monitoring equipment. In the context of vigorous promotion of ultra-clean emissions, the approved ultra-clean emissions results will be an important opportunity for the development of flow equipment.
Investment advice: Maintain the increase in holdings rating. Considering the merger and acquisition of Jiechi Technology, we predict that Baoxin Technology's net profit will reach 22/320 million yuan in 16-17, and that the market value of completing the additional exam preparation will reach 7.2 billion yuan. The company is an absolute leader in the fields of PCB waste liquid circulation, matrix flow monitoring, low valley electric heat storage heating, etc. The PCB waste recycling market space reached 20 billion dollars in net profit, and the increase in listing helped Jiechi Technology expand rapidly. Various regions require the installation of accurate flow monitoring equipment, and matrix flow monitoring has ushered in an explosion. The bottom area, continues to be highly recommended.
Risk warning: the restructuring progress is lower than expected