Proposed acquisition of two beef cattle slaughtering companies in Uruguay
The company announced its resumption of trading on August 14 to acquire LirtixS.A, two Uruguayan beef slaughtering and processing companies, in cash. And RondatelS.A.100% shares, the transaction consideration of $82.3 million; the future acquisition of Argentina BlackBambooEnterprisesS.A. And ChrysanTawEnterprisesS.A. If the acquisition is completed, all four companies will form related party transactions with the listed company. The company promises that the deducted non-net profits of the two beef cattle slaughtering companies in Uruguay for 2017-19 will not be less than US $4.702 million, US $8.153 million and US $10.47 million.
In April 2016, Shangheng Guantong (the actual control is Hengyang cattle) became a major shareholder, holding 10.99%. New continent plans to acquire 100% of Hengyang cattle and its related assets through a non-public offering. Hengyang cattle industry, which mainly deals with beef slaughtering and processing, has two slaughterhouses in China with total assets of more than 2 billion yuan. as of August 14, 17, the proposed acquisition of shares in Hengyang cattle industry is still in progress. as Hengyang cattle industry's current procurement of cattle sources in China needs to be further standardized, the company plans to first purchase overseas cattle source assets to ensure adequate supply of raw materials. After stopping the domestic procurement or by Hengyang cattle industry to divest the relevant assets of the domestic procurement cattle source business, and then promote the work of buying the equity of Hengyang cattle industry.
The traditional business is mainly coal, and the motorcycle business has been spun off.
Coal business: it is expected to produce 2.81 million tons of raw coal in 17 years, an increase of 42% over the same period last year; the growth comes from the commissioning of Shengli Coal Mine in November 16. It lost 42 million yuan in 2016 and is expected to make a profit in 2017. Logistics business: the company's logistics business is managed by the holding subsidiary Xinzhou Logistics. The net profit of New Continental Logistics contribution Company in 2016 is 12.6 million yuan.
Other businesses: the joint venture's New Dazhou Honda made a net profit of 78.85 million yuan in 16 years, which was completely spun off in 17 years; the electric vehicle business made a profit of 1.45 million yuan in 16 years, reducing losses compared with the same period last year; the yacht business with 23% stake made a profit of 45 million yuan in 16 years; aviation parts manufacturing lost 1.13 million yuan in 16 years.
After the completion of the reorganization, the company's EPS in 17-19 is expected to be 0.13,0.23,0.35 yuan.
The company has more business at present, and it is expected that the company will focus on developing beef business and coal business in the future. The company is currently promoting the acquisition of Hengyang cattle industry in China (according to the announcement of January 25, 16) and two slaughterhouses in Argentina (according to the announcement of June 13, 17). The current valuation of the company is on the high side, 61 times of PE in 17 years, but there is a broad space for the beef market in China. With the steady progress of the company's asset restructuring, it is expected that the profit of the company's beef food business will increase significantly. We give it a "cautious overweight" rating.
Risk hint: the progress of asset restructuring is not as expected, and the trend of coal price is lower than expected.
