This report is read as follows:
The company announced the draft acquisition of Gardner Aerospace Holdings Limited (Gardner), one of the largest aviation metal parts processing companies in Europe. Once the acquisition is completed, the layout of the company's aviation industry chain is expected to speed up significantly.
Main points of investment:
It is proposed to acquire Gardner and maintain its overweight rating. The company announced that it intends to buy Gardner Aviation Holdings Limited (hereinafter referred to as Gardner) for 326 million pounds. Once the acquisition is completed, the layout of the company's aviation industry chain will be significantly accelerated, but the company has suspended the original main molybdenum concentrate mining, so it has lowered its 2018 EPS forecast to 0.04 Gardner 0.11 yuan (the original value is 0.39 Gardner 0.58 yuan). The new EPS forecast for 2019 is 0.19 yuan.
Considering that Gardner's successful merger will greatly increase the company's performance, and once the company's single crystal blades are released, it will break the overseas monopoly, which is of great strategic significance. With reference to the industry valuation level and giving the leading enterprises a certain valuation premium, the target price will be lowered to 30 yuan (the previous value is 37.18 yuan) to maintain the overweight rating.
Gardner has strong strength in the field of aviation metal parts manufacturing. Gardner has deep technology accumulation in aviation metal parts forming, parts surface treatment, parts assembly, etc. the company has parts processing equipment and capabilities that meet all aviation supply chain standards, including AS9100,ISO14001 and OHSAS18001 certification, technology and channels have strong strength.
With both domestic and international efforts, the layout of the company's aviation industry chain is expected to continue to advance. At present, the layout of the aviation industry chain is progressing smoothly: the domestic industry layout of high-temperature blades, aero-engines and drones has been formed; the international companies have obtained EN9100 (Europe) certification and obtained the necessary qualifications to enter the supply chain of aero-engine manufacturers. We believe that the company and Gardner have obvious synergy in the industrial chain. If the acquisition is successfully completed, the company is expected to successfully enter the international market with the help of Gardner, further integrate the resources of the aviation industry chain and improve the layout of related industries.
Catalyst: the acquisition was successfully completed.
Risk hint: the integration of the industrial chain is not as expected.