The current situation of the company
Easy special issued a draft report on major asset purchases, and the company intends to pay 2.9 billion yuan in cash for 100% equity interest in Ningbo Yize. The core assets of the underlying company are two companies engaged in photovoltaic module and battery manufacturing respectively in Vietnam (Vietnam Photovoltaic and Vietnam Battery).
Comment
Extend the industrial layout and enhance the company's comprehensive strength in the photovoltaic industry. Vietnam photovoltaic is mainly engaged in the commissioned processing business of photovoltaic modules, and currently has the module capacity of 4.0GW; Vietnam cells are mainly engaged in photovoltaic battery production and commissioned processing business, design capacity 1.1GW. The main customers of both are international well-known photovoltaic equipment manufacturers, and their products are mainly sold to the United States, Europe and other places. Through this acquisition, Ericsson continues to expand its photovoltaic module and battery manufacturing business upstream on the basis of photovoltaic inverter, system integration and power station operation business. the integrated synergy is expected to enhance the company's profitability and competitiveness in the photovoltaic field. At the same time, the company's industrial layout has also been extended to Southeast Asia, and the customer base has been further globalized.
The deal is priced reasonably, and cash acquisitions are expected to significantly increase the company's profits. The underlying company made a net profit of about 249 million yuan in 2016, and the transaction is priced at 11.6x Phammer E, with a relatively reasonable valuation. The performance of the underlying company promises that the deducted non-net profit in the year in which the delivery is completed and the two fiscal years after the completion of the delivery is not less than RMB 350 million, respectively. Due to the special cash acquisition of easy things, if the transaction is completed and the target company is operating normally, it will significantly increase the company's future profits.
Photovoltaic industry to maintain a high demeanor, is expected to promote the company's sustained high growth. The company has nearly 500MW photovoltaic power stations connected to the grid, 1H17 power generation revenue of 143 million yuan, the third quarter of the performance contribution will be more significant. The rise of distributed photovoltaic has helped the domestic photovoltaic installation reach 42GW in the first three quarters, and the company's photovoltaic system integration business revenue is expected to continue to grow at a high speed. If this acquisition is completed, while the target company's business brings opportunities for vertical integration of the industrial chain, its extensive customer base is expected to stimulate the company's overseas sales, expand the overseas sales scale of the system integration business, and form a new business growth point.
Valuation proposal
As the acquisition has not yet been formally completed and there is still uncertainty in the SFC investigation, we keep the company's profit forecast unchanged for the time being. The current share price corresponds to the 2018 26x Ppace E, we maintain the target price of 9 yuan and maintain the neutral rating.
Risk
CSRC investigation; acquisition integration risk; photovoltaic industry subsidy reduction and fierce competition.
