Main points of investment:

Huachangda today issued a pre-acquisition plan to acquire 100% stake in Shi Dewei and 100% stake in Knox Technology for 1.5 billion yuan and 330 million yuan respectively. Of these, 70% of the consideration is paid by shares, the consideration price is 18.97 yuan per share, and the remaining 30% is paid in cash. At the same time, it raised 1.8 billion yuan by issuing an additional 173 million shares to the three institutions. Both of the above restrictions are lifted for 36 months (the pre-resumption price is 23.43 yuan per share). This acquisition has a certain positive effect on transformation and upgrading.

With the help of Internet companies, we will develop a new model for the integration of industrial automation and Internet technology solutions. Shi Dewei is a traditional Internet marketing enterprise with a business model, mainly engaged in customer relationship management (CRM), big data analysis, Internet informatization, software development and other business. At present, the total number of customers is about 40,000. Among these customers, industrial manufacturing enterprises account for about 80%, and trade enterprises account for about 20%. Through this acquisition, Huachangda will take advantage of its Internet information technology to carry out the research and development of intelligent factories, coordinate the development of industry 4.0, and improve the industrial layout. The compound growth rate of net profit in the next three years is more than 30%.

Further promote the in-depth accumulation of customer resources and occupy the commanding heights of competition in the industry. Knox Technology is a high-end automotive manufacturing robot automatic welding automation line technology supplier of automotive manufacturing automation equipment, the business attribute is almost the same as Demecco. Mainly with Austria TMS strategic cooperation, customers to Volkswagen, BMW, Mercedes-Benz and other German brands, is an exclusive cooperation, and Huachangda overlap rate is small. This acquisition has the value of customer channels and technology integration, enters the high-end market, and the compound growth rate of net profit is more than 30% in the next 3-5 years.

We continue to strongly recommend that the main logic is as follows:

The main contents are as follows: 1. The layout of automobile manufacturing automation integration business is reasonable, and the collaborative benefit will appear gradually. The business of body-in-white (mainly de Mecco) benefits from the persistent market demand and large volume, and has outstanding advantages over local counterparts in technology, production line design experience and capital, lower cost and high quality service than foreign enterprises. there is broad room for expansion in the future.

2. The performance of mechanized transport plate (DMW) may also rise rapidly. Under the opportunity of the US economic recovery and mainstream car companies starting to reinvest in car capacity, through cooperation between China and the United States, most of the future manufacturing capacity will be outsourced or moved to China, significantly reducing costs, abundant orders on hand, and earnings are likely to significantly exceed expectations.

3. Today, the results forecast for the first three quarters of 2015 was issued. During the reporting period, the net profit attributed to the parent company was 78 million-85 million yuan, an increase of 216% over the same period last year.

4. After the additional offering, the total shares are about 717 million shares, corresponding to a market value of about 16.8 billion yuan. It is recommended to resume trading and buy after a certain amount of changing hands.

Performance forecast: considering the performance of Demecco, the company headquarters and DMW, the net profit in 2015 is expected to be about 120 million yuan; assuming that the merger and acquisition is completed this year, considering the performance of Shi Dewei and Knox, the net profit in 2016 is expected to be about 320 million yuan. Risk hint: the speed of industrial integration is slower than expected.