In May 2017, the company plans to acquire 100% of Runxing Technology's shares by issuing shares and cash at a price of 2.95 billion yuan, of which 826 million yuan will be paid in cash and 2,124 million yuan will be paid in issued shares. The share issue price is 888 yuan/share, and the number of shares issued is 239 million. At the same time, it plans to raise no more than 858 million yuan in supporting capital through fixed increases. The target Runxing Technology is one of the largest high-end CNC machine tool manufacturers in South China. Its products are mainly high-end and general-purpose machining centers, which are mainly used in 3C electronic products, auto parts, and various mold processing industries. The company has been highly recognized by well-known consumer electronics manufacturers such as Liantai Precision and BYD due to its stable and reliable product quality, remarkable cost performance advantages, and quick after-sales service response. Sales of core products drilling and processing centers grew rapidly, and production and sales nearly doubled in 2016. With the combination of new and updated demand, the CNC equipment market space will exceed 10 billion yuan. IDC statistics show that in 2016, total global smartphone sales were 1,471 billion units, up 2.32% year on year, and began a steady growth stage. At the same time, the downstream consumer electronics industry is in a period of transformation, and plastic structural parts widely used in smartphones have been replaced by metal precision structural parts, resulting in a sharp increase in demand for drilling and processing centers used to process metal structural parts. Considering that low- and mid-range smartphones still mostly use plastic cases, there is still plenty of room for improvement in the overall smartphone market penetration rate. If this penetration rate increases by 10% every year in the future, according to the global smartphone shipment volume described above, about 147 million new metal cases are produced every year. The average yield of the industry is 70%, and the CNC processing time for a single metal case is 40 minutes. If each CNC machine works for 300 days* 24 hours, then the annual output of 0.76 million metal cases will increase, and the annual production demand for CNC will increase by 193,000 units. At the same time, according to the company's purchase instructions, the current demand for CNC processing equipment to be replaced each year is 332-41,500 units if calculated on a 5-year upgrade cycle. Without considering the demand for new equipment such as Ultrabooks, tablets, and smart wearables, the annual demand for drilling and processing centers is at least 52,500 units. If the unit price is 220,000 yuan/unit, the annual market space is conservative at 11.55 billion yuan. The container handling equipment business is gradually picking up. Stainless steel industry deepening development companies are mainly engaged in R&D, production, installation and sales of container handling equipment such as rail cranes and shore bridges, as well as the trade-oriented stainless steel business. With the improvement in China's inland waterway and coastal waterway transport construction investment situation, the increase in inland waterway and coastal container cargo throughput, and the government's continuous introduction of favorable policies, the container handling equipment market is gradually warming up. The company's order amount increased significantly compared to the previous period. At the end of 2016, the company's stock order amount was about 712 million yuan. 2017Q1 achieved total revenue of 894 million yuan, an increase of 116.59% over the previous year, and a net profit of 5.5059 million yuan, an increase of 46.85% over the previous year. In addition, the prototype structure of the company's stainless steel sector has been basically established, and the comprehensive strategic layout of the three sectors of stainless steel spot trade, steel e-commerce platform, processing and storage has been completed, and the in-depth development of the stainless steel industry chain has been realized. Profit forecast: The company is expected to achieve operating income of 4.261 billion yuan, 5.678 billion yuan, and 7.448 billion yuan in 2017-2019. Net profit attributable to the parent company was 365 million yuan, 500 million yuan, and 653 million yuan respectively, and EPS was 0.36 yuan, 0.49 yuan, and 0.64 yuan respectively, giving it a “buy” rating. Risk warning: macroeconomic downturn, mergers and acquisitions fail, downstream demand continues to weaken