The Baling Investment Fund received a capital increase and the establishment of Baling Gaia to accelerate the transformation. The company announced on December 1 that the company and company executive Mr. Huang Shengtian plan to jointly increase the capital of the Shenzhen Qianhai Baling Investment Fund partnership by 200 million yuan according to their respective investment ratios, including the company's capital increase of 190 million yuan and Huang Shengtian's capital increase by 10 million yuan; at the same time, Baling Investment plans to absorb no more than 8 partners into the partnership, with a total investment of no more than 800 million yuan. On the same day, the company announced that Baling Investment Fund, Gaia Network, and Mr. Wang Yanzhi invested a total of 195 million yuan to establish Qianhai Baling Gaia Investment Management Co., Ltd. (Baling Investment Fund 66.66%, Wang Yanzhi 33.33%).
Baling Gaia focuses on investment in entertainment culture and building a new business with high growth. Baling Gaia will focus on investing in equity and other assets in the entertainment and culture industry, such as online games, which will be an important expansion experiment for the company's third main business. The company's private offering was approved on November 23. Currently, its finances are healthy, the balance ratio is low, and the cash on hand is plentiful. The intensity of the subsequent transformation is highly clear.
Short-term VR themes are strong, and growth potential is promising in the medium term. The company's current assets include auto parts, cultural entertainment, and potential future online games. Among them, cultural and performing arts assets include the theme performance “Impression? “Shajiabang”, the sci-fi themed performance “The Lost Dinosaurs”, and future online game investments. On the one hand, the market maps companies to VR themes, which are expected to be strong in the short term; on the other hand, they are optimistic about the company's growth in the medium term based on themed performances, etc.
Profit forecasts and investment recommendations. The prosperity of the automobile industry fluctuates, there is partial overcapacity in the parts sub-industry, and there is a possibility that performance will be under pressure. The company is seeking future equity growth and plans to lay out diversified strategies to enhance long-term growth through more mergers and acquisitions, new business development, etc.; at the same time, the company's finances are healthy, capital is abundant, and subsequent transformation efforts are highly clear. Continued industrial layout events, automobile lightweighting, and cultural industry opportunities will steadily boost the company's market value. The 2015-2017 EPS is expected to be 0.53, 0.82, and 1.18 yuan, corresponding to the closing price of PE on November 30, 2015, 107, 69, 48 times, respectively. The target price is 70 yuan, which corresponds to 86 times PE in 2016, maintaining the buying rating.
Risk warning. The boom in the automotive industry has fluctuated. The progress of the transformation business fell short of expectations.
