Event: Rongyu Group announced on December 29, 2016 that the company and Lianbao Group signed the Framework Agreement between Rongyu Group Co., Ltd. and Lianbao Investment Group Co., Ltd. on the equity transfer of Beijing United Insurance Brokerage Co., Ltd., and Lianbao Group will transfer 100% of the equity of Lianbao broker to Rongyu Group.
Enter the insurance broker to improve the profit of the company.
The main results are as follows: (1) the profit expectation of the broker is better. Lianbao Brokerage is a brokerage company that focuses on the construction of risk management service system in the national education industry. according to the company announcement, Lianbao Brokerage has been employed as a risk management consultant by the Education Commission (Education Department and Bureau) of more than 20 provinces and cities across the country. to provide risk management and insurance brokerage services for more than 100 million students across the country. It is estimated that the company's net profit for the whole year of 2016 will reach 66 million yuan. With the improvement of the prosperity of the industry, the profits of Lianbao brokers are expected to continue to increase in 2017, promoting the overall profitability of the company.
(2) the prosperity of the insurance brokerage industry will be improved. According to the data of the CIRC, China's insurance brokers achieved a premium income of 50.45 billion yuan in 2014, accounting for 2.5% of the country's total premium income in 2014. Although the scale of premiums realized by insurance brokers is small, according to international experience, a sound insurance intermediary market is an indispensable and important part of a sound insurance market, and China's insurance brokerage institutions will gradually deepen their participation in the insurance market. It is expected that the prosperity of the insurance brokerage industry will improve.
Lianbao brokers are expected to develop in coordination with Jiangxi Zhirong. In November 2016, the company announced that it would buy 100% shares of Jiangxi Zhirong for 250 million yuan, and it is expected that there will be business synergy between the company's proposed acquisition of Lianbao brokers and Jiangxi Zirong. The big data application software developed by Jiangxi Zhirong Institute will make the market positioning of the brokers more accurate, so as to improve the sales market and industry acceptance of the brokers. According to the company announcement, the net profit promised by Jiangxi Zirong in 2017 and 2018 is not less than 17 million yuan and 23 million yuan respectively. Through the combined development of Lianbao brokers and Jiangxi Zirong, the company will achieve the coordination of the innovation and technology sector and the financial services sector, and the performance will continue to develop steadily.
Lianbao brokers deepen the transformation of the company's financial control. Rongyu Group's traditional business is mainly the research and development, production and sales of permanent magnet switches and complete sets of high and low voltage switching equipment, which is affected by the macroeconomic downturn. According to the company's announcement data, the company's operating income in the first three quarters of 2016 was 70 million yuan (down 30% from the same period last year). In the context of the main business recession, the company has begun to transform into a financial control platform.
The company will enter the insurance brokerage industry through the acquisition of Lianbao brokers, realize the expansion of the financial industry chain, and build a comprehensive financial holding platform for license plate finance and industrial direct investment in the future.
Multi-faceted layout of finance promotes the value of the company. The company has been involved in banking, credit information, big data, financial leasing, commercial factoring and other pan-financial fields. At present, the company has completed its investment in Fushun Bank, becoming the largest shareholder of Fushun Bank (9.28%), and the company has invested in the establishment of a wholly-owned subsidiary Yongda Innovation Financial Services (Shenzhen) Co., Ltd., as an expansion platform in the pan-financial field. Subsequently, the company invested in the establishment of factoring, and the industrial and commercial registration procedures of Rongyu Communication (Tianjin) Commercial factoring Co., Ltd., a wholly-owned subsidiary, had been completed as of December 5, 2015. in addition, according to the company announcement, the company intends to independently invest in the establishment of Rongyu Huatong Financial Leasing Co., Ltd., with a registered capital of RMB 170 million. The company's multi-faceted layout of finance will enhance the value of the company and enhance its profitability in the future.
Investment advice: buy-An investment rating, 6-month target price of 17 yuan. We estimate that the EPS of the company from 2016 to 2018 is 0.06,0.15,0.20 respectively.
Risk tips: market risk / macro risk / operational risk.