Summary of the report:
The advantage enterprise of electromagnetic wire, the breakthrough of endogenous reactor product.
The company is committed to the design, research and development, production and sales of electromagnetic wire high-tech enterprises, the main products are transposed aluminum wire, film wrapped round aluminum wire, enamelled aluminum flat wire, enamelled copper flat wire and transposed copper wire and so on. In order to seek a breakthrough in the downstream industry, the company invested in the establishment of a holding subsidiary Tianjin Jingwei Zhengneng Electrical equipment Co., Ltd., taking the reactor as an important direction for the further development of the company. After passing the technical appraisal, the reactor product has won the bid for UHV project twice. We believe that the company's reactor products are expected to continue to win the bid after having experience in networking, and we continue to be optimistic about the performance flexibility of the company's reactor products during the peak period of UHV project construction.
Proposed merger and acquisition of Xinhuikai to carry out extension expansion
The company plans to issue shares and pay cash together to purchase the 100% stake in Xinhuikai held by the other side of the transaction, and extend the business section to the manufacturing field of touch display products, forming a situation of dual-main business development. Xinhuikai has a strong competitive advantage in the market, has a large space for the development of the industry, and has a good sustainable profitability. the net profit promised to be achieved in 2016,2017 and 2018 is not less than 74.3745 million yuan, 113.0143 million yuan and 136.5351 million yuan respectively.
There is a broad demand for touch display products. Xinhuikai Technology (Shenzhen) Co., Ltd., which has high quality customer resources, is an one-stop service provider specializing in touch display products, including capacitive touch screen, liquid crystal display module, touch display module and matching ITO glass, cover glass, protective screen, etc., its products are widely used in vehicle display, medical equipment, industrial control and other fields.
In recent years, due to the improvement of the prosperity of the downstream industry, Xinhuikai's operating income, net profit and gross profit margin showed an increasing trend. The company's products have been widely recognized by well-known customers at home and abroad, and are suppliers of Flextronics, Honeywell International Inc and other top 500 enterprises in the world. It is expected that with the support of high-quality customers, the company will be able to achieve performance commitments, and is expected to rely on the financial advantages of listed companies to enhance business scale, improve market competitiveness and market share.
Profit forecast and investment suggestion
If the asset restructuring is carried out smoothly, according to the estimate of the New Huikai merger Table in 2017, the company's EPS in 16-18 is expected to be 0.07,0.43 and 0.56 yuan respectively, corresponding to 245X, 38X and 29X, respectively. The company is optimistic about the growth space in the touch display field and is given a "highly recommended" rating.
Risk hint
1) there is a risk of approval and termination in the reorganization of major assets; 2) the expansion of the reactor market is not up to expectations.
