I. Overview of events
Recently, Furi Electronics issued an announcement: it will increase its capital by 199.939825 million yuan to Zhongnuo Telecom, a wholly-owned subsidiary. After this capital increase, the registered capital of SinoCom will increase from 156.060175 million yuan to 356 million yuan.
II. Analysis and judgment
This capital increase will reduce the asset-liability ratio of SinoCom and help it reduce its financing costs.
1. SinoCom has a high asset-liability ratio. By the end of 2016, SinoCom's total assets were 2.432 billion yuan, net assets were 694 million yuan, and the asset-liability ratio was 71.46%, which was higher than the overall asset-liability ratio of 48.67% reported by the SW electronics industry in 16 years. As of March 31, 2017, SinoCom's total assets were 2.21 billion yuan, net assets were 720 million yuan, and the asset-liability ratio was 67.39%, which was higher than the overall asset-liability ratio of SW electronics industry 17Q1 48.58%. After this increase, the asset-liability ratio of China Nuo Communications will drop to 61.8%.
2. We believe that this capital increase is in line with the financial situation of SinoCom, and will be able to reduce its asset-liability ratio and financing costs, and improve its credit rating and performance level.
This capital increase is in line with the company's strategic plan, will optimize the communications business, and help SinoCom to expand its new business.
1. SinoCom is mainly engaged in smartphone design and contract manufacturing services, with customers including Huawei and Lenovo, and will actively expand domestic high-quality customers in the future. vigorously develop Europe, America, Africa and other overseas markets and look for high value-added products business cooperation opportunities.
2. In 2016, Zhongnuo Telecom achieved 3.668 billion yuan in revenue, 126 million yuan in net profit, 3.43% in sales net interest rate in 2017Q1, 1.044 billion yuan in revenue, 27.2427 million yuan in net profit and 2.61% in sales net interest.
3. We believe that the mobile communication terminal ODM/OEM industry belongs to the asset-heavy industry, the products are highly standardized, and the capital strength can enlarge the scale effect of product manufacturing and reduce the marginal cost. This capital increase is in line with the company's strategic plan to continue to expand and strengthen its communications business, will be able to optimize communications business, help SinoCom expand new business and new orders, magnify the scale effect of smartphone manufacturing products, and improve its net sales interest rate.
Third, profit forecast and investment suggestions
It is estimated that the EPS of the company from 2017 to 2019 is 0.18,0.22 and 0.25yuan respectively. Considering that the company is the key listing platform of Fujian State-owned assets Supervision and Administration Commission and has the expectation of state-owned enterprise reform, the company can be given 60 times PE in 2017, and a reasonable valuation of RMB9.90 ~ 10.80in the next 12 months, maintaining the company's "cautious recommendation" rating.
Fourth, risk tips:
1, smartphone shipments fall short of expectations; 2, industry competition intensifies; 3, product price reduction risk.