The company announced that it has signed the Cooperation Framework Agreement for the acquisition of Nissan Battery Company with GSR CAPITAL Advisors and Tianjin Jinshajiang. When the Nissan battery lands on Chinese mainland, the company will enjoy certain priority, and is expected to promote the holding subsidiary Zhihang New Energy to expand the soft package business. The company's new energy business is developing rapidly, the traditional business is stable, and the buy rating is maintained, with a target price of 35.00 yuan.
Support the main points of rating
Signed the cooperation framework agreement with Jinshajiang to acquire Nissan Battery Company: the Company signed the Cooperation Framework Agreement for the acquisition of Nissan Battery Company with GSR CAPITALAdvisors and Tianjin Jinshajiang. The company (or the designated party of the company) intends to directly or indirectly contribute no more than US $100 million to subscribe for the limited partnership share of the acquisition fund of Nissan Battery Company. Jinshajiang Capital has signed a formal acquisition agreement with Nissan on the acquisition of Nissan Battery Company. Where all / single patents or technologies enjoyed by Nissan battery company are licensed in Chinese mainland region, the company shall enjoy price concessions; the project shall be subject to preferential selection of the company under the same conditions on the cooperation of landing in Chinese mainland region; if the future M & A fund intends to withdraw by selling all or part of the interests of the project company to A-share listed companies and industry strategic investors, the company shall enjoy the right of preemption under the same conditions.
Nissan battery is expected to promote Zhihang New Energy to expand soft package battery: the company's holding subsidiary Zhihang New Energy has a production capacity of 10,000 tons of cathode materials, Nissan 500,000 units of 18650 lithium battery cell capacity (about 1.7GWh), and the complete production line of PACK system, which is expected to expand to 3.5GWh in the third quarter. Under the same conditions, when Nissan battery company arrives at Chinese mainland, the company enjoys certain priority; if Zhihang New Energy expands the soft package car power battery industry in the future, it is expected to engraft Nissan battery company's technology to improve its production, research and development capabilities in the automobile power battery field, thus realizing the upgrading of the power battery industry.
Main risks faced by rating
The new energy vehicle policy falls short of expectations; the power battery business falls short of expectations.
Valuation
Under the current equity, we expect the company to earn 1.24,1.45,1.61 yuan per share from 2017 to 2019, with a price-to-earnings ratio of 20.8,17.8,16.1 times the previous share price.