Main points of investment:
History carding company was founded in 1997, has developed into a domestic leader in the field of metal wear-resistant materials. In 2016, it is planned to increase the income and purchase of auto parts company majestic Seiko to enter the fields of car seats, car safety devices and so on. If the fixed increase is successfully implemented, the company will form a dual main business pattern of "wear-resistant materials + auto parts".
The traditional main wear-resistant materials business continues to maintain a leading position in the industry. The company is the largest manufacturer of wear-resistant ball segments in the industry. It established a postdoctoral mobile station in 2016, and some scientific research projects won the second prize for national scientific and technological progress in 2015. The company actively consolidates its R & D and market advantages accumulated over the years to cope with the economic downturn and shrinking market demand, and the wear-resistant materials business is expected to continue to maintain a leading position in the industry.
The majestic Seiko company, which intends to acquire high-quality auto parts, intends to acquire majestic Seiko at a price of 1.2867 billion yuan. The performance commitment of the target company in 2016-18 is that the net profit is not less than 115 million yuan, 125 million yuan and 135 million yuan respectively, and the cumulative net profit is not less than 375 million yuan. The target company is a second-class supplier of high-quality auto parts, with remarkable R & D and profitability, has cultivated a stable and high-quality customer base, and has room for sustainable development in the future.
Maintain the recommended rating: based on the principle of prudence, when the private placement is not finally completed, the dilution of equity and the impact on performance are not taken into account. It is estimated that the company's EPS for 2016-18 will be 0.25 EPS 0.14 shock 0.10 yuan per share; if the IPO is successfully completed, the company's 2016-18 EPS will be 0.700.74x0.78 yuan per share, corresponding to PE of 79-74-71. We believe that the company's strategy is clear, actively explore extension development opportunities, future growth is expected, and maintain the overweight rating.
Risk tips: the risk that the non-public offering can not be completed smoothly; the risk that the new business fails to fulfill its performance promise; and the risk of a sharp decline in the performance of the company's original main business.