Main points of investment
Asset restructuring is proposed to be loaded into the domestic CPU leader. The company's main industry is the textile industry, with a loss of 23 million yuan from January to September 2015. This restructuring is proposed to install domestic CPU leader Zhongzhi Core Technology, with a total of 620 million yuan per share to buy Zhongzhixin (which has not yet promised net profit). At the same time, it will raise no more than 600 million yuan from Zhongxin Financial Chuang with 13.73 yuan per share. It is used for the construction of domestic CPU R & D center, computer industrialization base, testing center and so on. After the completion of the transaction, the total share capital of the company will increase by 48%, and Peking University will become the largest shareholder, with a stake of 16.41%.
Zhong Zhixin: a domestic CPU leader with x86 architecture technology authorization. On the one hand, Zhong Zhixin has its own CPU architecture UniCore, while its parent company, Peking University Zhongzhi, has the AMD x86 architecture technology license and undertakes many government scientific research projects. Zhong Zhixin has authorized the UniCore architecture to Peking University Zhongzhi, and purchased Peking University Zhongzhi's UniCore/x86 compatible architecture CPU for developing and selling secure computers, with a current gross profit margin of 50% to 60%. Because of the advantages of CPU architecture, Zhong Zhixin Security computer supports both domestic operating system and Windows, and because most of its customers are government and defense customers, the company's products are conducive to both information security and daily office work, thus winning customers' favor.
Benefiting from the demand for information security and the localization of chips, the company has great potential for growth. Due to the influence of Prism Gate and Stuxnet virus events, China has taken chip localization as a major strategy to support. Zhong Zhixin's downstream customers include government agencies, national defense units, scientific research institutes, the financial industry and large state-owned enterprises and institutions, and have an urgent need for information security, so the company has great potential for growth. The company has a wide variety of secure computers, from desktops, all-in-one computers, MiniPC, tablets to cloud terminals, and we believe that with the acceleration of information security construction, the demand for secure computers in various sectors of our country will emerge one after another.
Competition pattern: the company has outstanding advantages and hopes to occupy the main share of the security computer market. At present, only Zhongzhi and Godson under the Chinese Academy of Sciences have more mature computer CPU research and development capabilities. However, we think that Zhong Zhi's competitive advantage is very outstanding, the main reasons are: (1) Godson CPU architecture is MIPS, so it is difficult to open up the computer field, while Zhi Zhi CPU has outstanding compatibility advantages. (2) in August 2015, the latest Godson computer CPU "3A2000" frequency is 0.8~1GHz, power consumption is 15W, there is still a significant gap with the popular "2.2GHz 6W". The outstanding advantages in performance enable Volkswagen CPUs to help simplify the computer's heat dissipation design, greatly improve computer reliability and life, and help to develop lightweight and compact computers.
The domestic security computer market has great potential, with a current demand of about 30,000 units per year, which is expected to grow tenfold. At present, the domestic security computer market is about 30,000 units per year. Compared with the potential demand, the penetration rate is only 10%, which only covers the country's core security departments. We expect the demand to be rapidly enlarged in the future, and there is still room for 10 times growth. At the price of 30,000 yuan / Taiwan, the market space can reach 10 billion / year.
Risk factors. The risk of restructuring falling short of expectations, the risk of performance release not meeting expectations, and so on.
Profit forecast, valuation and investment rating. We predict that the EPS of the company in 2015 will be-0.17 PE 0.75 yuan, and the current price is 26.47 yuan corresponding to 35 times of the 2016 PE in 2017. Due to the huge market potential and significant competitive advantage faced by the company, it is expected to become the biggest beneficiary in the field of CPU information security. At the same time, the average PE of A-share IC design company 2016 is about 80 times, and the company's market capitalization is currently the smallest of similar companies, so it will be given 60 times PE in 2016, with a target price of 35 yuan. Give a "buy" rating for the first time.
