The company acquired 100% stake in Beihai Telecom, the "railway + urban rail" business was launched, and the embryonic form of rail transit informatization has emerged. The consumer finance business has entered the market and is expected to contribute great performance flexibility. Highly recommended for the first time.
Event: the company intends to issue shares and pay cash to buy 100.00% equity of Beihai Telecom, with a transaction consideration of 568 million yuan.
With the launch of "Railway + Urban Rail", the embryonic form of rail transit informatization has emerged: Beihai Communication acquired by the company is one of the leading urban rail transit information service providers in China. We believe that this acquisition is expected to allay the market's previous concerns about the decline of the company's business in the traditional railway sector and start a new journey. The company's traditional strength is in the "railway" side, providing traffic safety monitoring to customer service operation and maintenance and passenger station services. The core business of Beihai communication is vehicle passenger information system, subway special communication broadcasting system and railway passenger transport broadcasting system. Through this acquisition, the company will fully cut into the "urban rail transit" end, and the safety monitoring products and customer service operation and maintenance services used in the past can enter the field of urban rail transit on a large scale. And through the extension of the railway to the urban rail, the application scene of the company's important potential business consumer finance will also be extended. This means that the company will face a new market space. The performance commitment of 4000, 5000 and 61 million yuan of the target company is conducive to thickening the company's performance, and in the process of extending from the railway to the urban rail, the potential user base of consumer finance will also be expanded, and the business flexibility will be further enhanced.
Consumer finance has entered the market, and the synergy effect of multiple layouts is significant: in September 2015, the company invested 200 million yuan to participate in the establishment of Everbright Consumer Finance Company with Everbright Bank, and began to get involved in consumer finance business. this has a good synergy effect with the company's railway and urban rail service business, such as: 1) passenger ticket payment scene; 2) big data service based on rail transit. 3) Advertising under the scene of rail service. With the help of the huge passenger flow basis of railway passengers and urban rail transit, consumer financial business is expected to fully develop the company's traditional business resources and achieve pluralistic coordination. The consumer finance industry is in an explosive period in China, and the upgrading of consumption in the next two years will promote the wave of national leverage. We believe that if companies can get a share in this trend, they will contribute higher-than-expected earnings to their performance.
Coverage of the "highly recommended-A" rating for the first time: taking into account the company's growth in new urban rail markets and the explosion of consumer finance and other businesses, we expect a net profit of 0.95 pound per 1.8 billion yuan from 2016 to 2018. Give the first "highly recommended-A" rating.
Risk hints: (1) the policy support for rail transit construction is not as strong as expected. (2) the business of consumer financial companies is blocked.
