Items:
On April 30, the company released its first quarter 2016 report. During the reporting period, the company achieved revenue of 9.2454 million, down 44.87% from the same period last year; the net profit attributed to shareholders of listed companies was 3.5075 million yuan, down 72.93% from the same period last year. Affected by the overall economic environment of the electrical switch industry, customer project demand slowed down, resulting in a sharp decline in revenue; at the same time, the increase in management costs and financial costs led to a greater reduction in net profit.
Main viewpoints
1. The electrical switch business is affected by the overall environment of the industry.
The company achieved revenue of 9.2454 million, down 44.87% from the same period last year; the net profit attributed to shareholders of listed companies was 3.5075 million yuan, down 72.93% from the same period last year. Affected by the overall economic environment of the electrical switch industry, customer project demand slowed down, resulting in a sharp decline in revenue; at the same time, the increase in management costs and financial costs led to a greater reduction in net profit.
two。 Acquire Haike financing to expand Internet financial business.
The company intends to acquire 100% of Hai Ke Rongtong's shares by issuing shares and paying cash. The total transaction price of the preliminary negotiation is 2.97 billion yuan, of which 123.04 million shares are issued to pay the transaction consideration of 2.67 billion yuan and 300 million yuan in cash. The acquisition of Haike Unicom, the development of third-party payment, the company will give play to the synergy of various businesses, and continue to expand Internet financial services, enhance the company's performance growth and stability, enhance the value of the company. Haike Finance performance compensation obligor promises that the net profit in 2016, 2017 and 2018 shall not be less than 200 million yuan, 260 million yuan and 340 million yuan respectively.
3. Set up a wholly-owned subsidiary to enter the field of direct investment and big data application platform.
The company uses its own funds to invest in the Shenzhen Qianhai Shenzhen-Hong Kong Cooperation Zone to set up a wholly-owned subsidiary-Yongda Innovation Financial Services (Shenzhen) Co., Ltd., as an expansion platform in the pan-financial field, to invest in industries and projects with competitive advantages in communications and information, intelligent technology, Internet, finance, energy conservation and environmental protection, and education. And take it as the main body and establish a joint venture with the top team in big data field to establish Beijing Zhonghua data Software Technology Co., Ltd. (with control), engaged in big data platform and application development business in finance and other fields.
4. Strategic cooperation Huakang Financial Holdings to further build a financial control platform.
The company has established a comprehensive strategic partnership with Huakang Financial Holdings, which is a large enterprise group composed of insurance agents, wealth management, asset management and Internet finance. The company and Huakang Financial holding Company will establish a cooperative relationship with complementary resources to enhance the sustainability and stability of their profitability and realize the future development strategic planning of both sides.
5. The introduction of professional managers to realize the transformation from family enterprises to professional managers the company introduces Li Gang, chairman with senior management experience (former vice president of Unicom Group), who has rich management experience in large enterprise groups. it has realized the transformation of the management mode of the company from a family business to a professional manager, and the new management team attaches importance to openness, fairness and impartiality in enterprise management. Completely adopt the modern professional and standardized mode to manage the enterprise, and pay attention to the efficiency and effect of management.
6. Investment advice:
We believe that the pace of transformation of the company has obviously accelerated, and this time, through the acquisition of Haike Finance, it has opened a new chapter for the company's layout of third-party payment. in the future, we will focus on the development of third-party payment services, Internet lending financial services for enterprises, and financial control platforms. The net profit of Haike Rongtong in 2016, 2017 and 2018 is not less than 200 million yuan, 260 million yuan and 340 million yuan, respectively. We predict that the EPS (considering additional dilution) of Yongda Group in the next three years will be 0.47,0.58 and 0.72 yuan respectively, according to the current share price corresponding to 52 times, 42 times and 34 times of PE for the first time.
Risk Tips:
The performance of the bet is not as expected; the acquisition is uncertain.