Item:
The company recently announced that the cash acquisition of CALIENT Technologies, Inc.51% shares, the basic transaction consideration of 147.9 million U.S. dollars (about 1 billion yuan), the final transaction consideration will be determined in accordance with the "merger Agreement and Planning" agreed price adjustment mechanism.
Main viewpoints
1. The deal will be completed in two stages, with a 51% stake.
This transaction will realize the acquisition of the target company by way of company merger. The company plans to use Chunxing Holdings (USA) Ltd. Establish a project holding company and a merged subsidiary 1 (i.e. Lightspeed Merger Sub 1 Ltd.); the project holding company has a middle-tier company, and the middle-tier company has a merged subsidiary 2. After that, the merger subsidiary 1 and the target company merge for the first time, and the target company absorbs and merges the merger subsidiary 1. The acquisition company is bound by EBITDA, with a target of US $10 million in 2018; as this acquisition is a cash acquisition, it does not involve related party transactions and does not constitute a major asset restructuring of listed companies as stipulated in the measures for the Management of Major Asset reorganization of listed companies.
2.CALIENT Technologies, Inc: the industry's leading manufacturer of 3D-MEMS optical switch production technology
CALIENT's main products are S-series optical switch (hardware), capacity: 320 × 320 (port), 160 × 160 (port) or custom configuration; LightConnect architecture manager (software)-provides software management to the dynamic optical layer through the optical switch. The main application areas of the products are data center and cloud computing, SDN (software defined network) optical transmission, laboratory automation, other market segments include: multi-tenant and computer room sharing, media and entertainment, CRAN wireless infrastructure, and submarine cable landing, etc.
Calient's patented MEMS-based optical switching technology uses tiny controllable mirrors to achieve all-optical switching of optical signals without the usual delay caused by photoelectric conversion.
Calient's revenue in 2016 was $30 million, net profit was-$8.97 million and total assets were $26 million. In the first half of 2017, the company realized revenue of $12 million and net profit of-2.39 million
3. Chunxing Seiko reported average, the net profit of returning mother decreased by 47%.
In the first half of the year, while consolidating and developing the three main businesses of communications, consumer electronics and automobile, the company vigorously opened up new markets and customers, improved efficiency, strictly controlled expenses and reduced operating costs internally through fine management, and improved the layout of the consumer electronics industry chain through external mergers and acquisitions. However, due to a series of acquisition business, the utilization rate of new business capacity has not been fully utilized, and the financial expenses increased significantly during the reporting period, the overall profit level of the company in the first half of 2017 has been negatively affected.
In the first half of the year, the company's operating income was 1.4694456 billion yuan, up 22.13% over the same period last year; the company's total assets at the end of the reporting period were 7.4299571 billion yuan, up 36.53% over the same period last year; the company's operating profit was 61.0854 million yuan, down 44.01% over the same period last year; and the net profit belonging to shareholders of listed companies was 4810.89 yuan, down 47.83% from the same period last year.
The company predicts that the performance in the third quarter will decline by 30%, 60% compared with the same period last year, and the net profit will be about 53 million-94 million. The main reason for the decline is that it is difficult for the new company to achieve profitability in the start-up and trial production stage within a short period of time. Radio frequency parts development of new customers, more early R & D investment
4. Investment advice:
The company will continue to focus on the three main businesses of communications, consumer electronics and automobile, continue to invest core resources and strengthen research and development. We predict that the company's eps in 2017 and 2018 will be 0.08,0.11 corresponding to PE122X and 88x, respectively. Based on the good future development prospects of the company's newly acquired CALIENT, we will give it a recommended rating.
5. Risk Tips:
(1) the traditional business is highly competitive and continues to decline.
(2) there is uncertainty in overseas acquisitions.