Events:
Da Yilong plans to buy 100% equity in Chizi City at a consideration of 2.5 billion yuan, of which 163 million yuan will be paid in cash and 2.337 billion yuan per share (the issue price is 15.39 yuan per share). At the same time, the supporting funds raised shall not exceed 1.5 billion (issue price 18.21 yuan per share), which will be used to pay cash consideration to the transaction object, to pay the funds needed for Chizicheng Mobile investment project, and to pay intermediary fees and related taxes and fees. After the completion of the transaction, the company will open the "liquid packaging machinery business + mobile Internet" dual-drive mode. According to the promise of gambling, Chizi City Mobile's net profit is expected to reach 115 million, 200 million and 285 million yuan in the next three years.
Main viewpoints
1. Dayilong complies with the trend and shifts from liquid packaging machinery business to mobile Internet service industry.
Before this transaction, Dayilong was mainly engaged in the design and manufacture of liquid packaging machinery. After the completion of this transaction, Dayilong will change from its original business to a listed company with twin engines of liquid packaging machinery design and manufacturing and mobile Internet. It publicly issued shares and paid a total of 2.5 billion in cash to acquire 100% stake in Chizicheng Mobile, while issuing additional matching funds of 1.5 billion yuan per share at 18.21 yuan.
two。 The performance of the target company promises high growth and is full of confidence in the future development.
The performance commitment compensation obligor undertakes that the after-tax net profit (the net profit belonging to the shareholders of the parent company after deducting non-recurring profits and losses) of the target company in 2016,2017 and 2018 shall not be less than 115 million yuan, 200 million yuan and 285 million yuan respectively.
3. Chizi City Mobile: the leading company of mobile Internet going to sea
Chizi City Mobile relies on its mobile products to obtain overseas users and actively explore overseas markets. It has accumulated more than 400 million users in North America, South Asia, Southeast Asia, the Middle East, Europe and South America. Chizi City Mobile will build itself into an advertising trading platform connecting advertisers and advertising media by establishing Aware big data platform to achieve precision marketing.
With the fierce competition in China Mobile Limited's Internet, overseas emerging countries have become a blue ocean market with great potential. China Mobile Limited's Internet is facing new opportunities to go out to sea. Chizi City Mobile's products have certain advantages, but there is still room for further development in overseas markets, and future growth is expected.
4. Investment advice:
We believe that revenue and net profit will increase significantly after the acquisition of Chizicheng Mobile, and the company's EPS (diluted) for 16-17 years is expected to be 0.22,0.5,0.72, respectively, and the corresponding PE is 104X 46x and 32x. Regardless of the combined time, it is predicted that the net profit of the company from 2016 to 2018 will be 125 million / 215 million / 311 million respectively. We are optimistic about mobile Internet going out to sea and the company's leading position in the field of mobile Internet going out to sea, covering it for the first time and giving it a recommended rating.
5. Risk Tips:
1) there is uncertainty in acquisition.
2) the gambling performance is not as expected.
3) there is uncertainty in the change of exchange rate.
