Key points of investment
Incident: The company announced that the holding company, Eastwest Travel Group, plans to transfer 74.86 million shares of the Company (15% of the company's total shares) to OCT Group. At the same time, Westtravel Group authorized the voting rights, proposal rights, and the right to participate in the shareholders' meeting of the remaining 30.14 million shares (accounting for 6.04% of the company's total shares) to OCT. The equity transfer price was 6.99 yuan (the arithmetic average of the daily weighted average price of the previous 30 trading days), with a total price of 523 million yuan. After the equity transfer, the total price was 523 million yuan. After the equity transfer, Huaqiao Group had the right to vote, 21.04 percent of the company's shares. Become the actual controller of the company.
Comment:
The head of OCT has deep ties with Xi'an. Duan Xiannian (current general manager and party committee secretary of OCT Group) is a native of Zhouzhi County, Xi'an City, Shaanxi Province. Before joining OCT Group, Duan Xiannian worked as a deputy mayor in Xi'an. At the time, he promoted the development of Xi'an Qujiang New Area using the “cultural brand+tourist attraction+city operation” development model. This practice was later summed up as the “Qujiang Model”; Duan Xiannian's deep roots with Xi'an added new brilliance to this cooperation.
Following the holding of Yunnan World Expo Group, a new map was added to the overseas Chinese tourism landscape. On June 19, 2017, OCBC Group signed an investment agreement with the Xi'an Municipal Government with a total investment of about 238 billion yuan. The project covers Qujiang New Area, Xixian New Area, Weiyang, Beilin, Lianhu and other regions. This is after Chuan, Qiong, and Yunnan. After Chuan, Qiong, and Yunnan, the OCT Group immediately invested 100 billion yuan in Xi'an, and its “culture+tourism+urbanization” commercial layout gradually took shape. Through this cooperation with the Xi'an Municipal Government, as well as the controlling shareholder of Qujiang Cultural Tourism, which plans to increase capital, and the current share transfer of Xi'an food and beverage shares, OCT is also being suspended. This time, OCT is expected to seize control of the three listed tourism companies in Xi'an in one fell swoop, similar to the indirect control of Yunnan Tourism. It is expected that in the future, OCT will make full use of the capital operation advantages of listed companies to assist the Group's tourism expansion.
OCT itself has many tourism resources and development and operation capabilities, and the innovative development models of “culture+tourism+urbanization” and “tourism+internet+finance” are advancing rapidly. OCT received more than 33 million visitors in 2016, with a cumulative total of nearly 350 million visitors, ranking first in Asia and fourth in the global industry. OCT creatively proposed innovative development models of “culture+tourism+urbanization” and “tourism+internet+finance”, and joined forces with central enterprises to focus the country on the PPP model, develop new towns, build a number of characteristic ancient towns in Shenzhen and Sichuan, lay out tourism throughout Yunnan and Hainan, and accelerate asset-light expansion of natural and cultural attractions across the country. At the same time, OCT has experience in developing and operating top domestic tourism projects such as Splendid China, Window of the World, and Happy Valley theme park chains.
Profit forecasting and investment ratings: The company's main business is catering and food processing. Operations have been under pressure in recent years. Several attempts at transformation and mergers and acquisitions have all failed. The controlling shareholder plans to change to OCT Group. Subsequent business models and business scope are expected to change dramatically. Continued attention will be paid to the specific cooperation methods between the company and OCT Group and the progress of this equity transfer to maintain the “increase in holdings” rating.
Risk warning: The equity transfer plan failed or passed.