Main points of investment
Noteworthy acquisition plan: to buy a 100% stake in Beida Zhongzhixin Technology, a domestic CPU design company. In December 2015, the company issued this acquisition plan, which is aimed at one of the best local CPU design teams in China. If implemented smoothly, the company will transform into the scarce concept of pure integrated circuit design in the A-share market and the core target of the localization of information security in the real sense, which deserves the full attention and attention of investors.
After the completion of the acquisition, it will form the allocation of the three major shareholders of "technology + capital + resources". Peking University Zhongzhi has an independent property right CPU and computer R & D team deeply related to Peking University; Haorong Capital provides strong capital support and extension imagination space for the company; Sanmao Group, as an actual control enterprise of Gansu Provincial State-owned assets Supervision and Administration Commission, can provide corresponding local policy support and supporting industrial parks, and the company will form a major shareholder configuration of the three carriages of "technology + capital + resources".
The market space for domestic security computers is 40 billion, and the compound annual growth rate is expected to be 100% in the next three years. At present, the domestic security computer market is about 30,000 units per year, which only covers the national core security departments, and the market penetration rate is low. With the construction of data information security, a large number of security computers with domestic CPU chips purchased by Chinese government agencies and other units have been put on the agenda, which is expected to promote the blowout development of domestic CPU chip industry in the next five years. It is expected that by 2025, the demand for domestic security computers will be as high as 25 million, with a market size of 30 billion to 40 billion yuan. In the next three years, the compound annual growth rate of domestic security computers is expected to exceed 100%.
Zhong Zhixin has significant technological advantages and is expected to occupy 30% of the domestic security computer market. Compared with the three domestic competitors, Tianjin Feiteng, Godson and Shanghai Mega, Zhong Zhixin CPU products have (1) heterogeneous multi-core physical isolation, (2) high integration, (3) high frequency, low power consumption and (4) excellent compatibility, which can meet the needs of domestic high security departments for safe computers, and successive governments have attached great importance to its development. In the future, the company is expected to become the leader of domestic CPU and PC in the future, and occupy 30% of the domestic security computer market.
Occupy the commanding heights of information security, master the core CPU technology, and have unlimited imagination space in the future. The company is expected to rely on its core CPU technology to develop the whole personal computer industry chain. The company can expand its products from CPU chips and security computers to ordinary PC, tablets, mobile phones and other fields, and customers from government agencies, national defense units and other fields to ordinary civilian fields.
Risk factors: the risk of restructuring falling short of expectations, the risk of performance release falling short of expectations, and so on.
Earnings forecast, valuation and investment rating: we maintain the company's EPS forecast for 2015-2017 at-0.17exp 0.59max 0.75RMB respectively. The company has obvious technical advantages in the field of domestic CPU, and is expected to grow into a leader in the field of domestic CPU and security computers in the future. Considering the scarcity of the company's target, with reference to the valuation level of the integrated circuit industry, the company is valued at 60 times PE in 2016, maintaining the target price of 35 yuan and maintaining the "buy" rating.
