Events:
On November 21, Chongqing Zongdian Power Co., Ltd. announced that it would invest 1.05 billion yuan to acquire a 100% stake in Chongqing Dajiang Power equipment Manufacturing Co., Ltd., by issuing shares and paying cash. Dajiang Power has promised to achieve a net profit of 70 million yuan, 98 million yuan and 126 million yuan in 2018, 2019 and 2020, respectively. After the acquisition, Dajiang Power will become a wholly owned subsidiary of Zongdian Power. This horizontal merger will enrich the core business of Zongdian Power Co., Ltd., optimize and improve the market layout, expand and extend Zongdian's coverage and penetration in General Dynamics business, and become a new profit point. If the acquisition is successfully completed, it is estimated that the net profit of 17-19 at the end of the statement is 2.7,3.6 and 410 million, corresponding to EPS 0.24,0.29,0.33 yuan. The company's shares have not resumed trading, and the company will be given a "prudent recommendation-A" rating temporarily.
Comments:
1. Acquire Dajiang Power to speed up the market integration of General Dynamics
Dajiang Power's main products are general gasoline engines and their terminal products, including engines, generators, cleaning agents, garden machinery and water pumps. Products are exported to Europe and the United States, Southeast Asia, the Middle East, Australia, Africa and other countries.
In 2016, Dajiang Power achieved an annual output of 650000 sets of general machinery, with a total output value of more than 1 billion yuan. In the same year, it was awarded the honor of the best outdoor product supplier of TTI (Chuangke Group). From January to August, Dajiang Power achieved revenue of 570 million, deducted non-net profit of 26.47 million yuan, and expected full-year net profit of 40 million (+ 70% compared with the same period last year), maintaining the momentum of rapid growth. After the acquisition of Dajiang, the company promised that the 18-20-year net profit will be 70 million yuan, 98 million yuan and 126 million yuan respectively, which will greatly increase the company's performance. We believe that after the acquisition of Dajiang Power, the company will realize the integration of the general power market and combine with the company's own general power business (focusing on the power system, partial to the middle), which will help to give full play to the synergy effect and further increase the scale and market share. Greatly improve profitability.
two。 Steady development of traditional main business and continuous promotion of new business
In the first half of 2017, the company's motorcycle business continued to maintain steady growth, with revenue of 1.575 billion (a year-on-year increase of 17.8%), and is expected to remain stable in the future. The company's general dynamics business showed signs of picking up in the first half of the year, with operating income of 583 million yuan (up 10.99% year-on-year), sales of 297800 units in the domestic market (+ 30.1%) and net profit of 35.1013 million yuan (+ 15.3%). At the same time, the company through continuous overseas expansion to stabilize the steady development of the traditional main business, overseas business revenue of 816 million yuan in the first half of the year, an increase of 9.6% over the same period last year, accounting for 52% of the overseas business. After the acquisition of Dajiang Power, the business scale and strength of General Dynamics will be greatly enhanced, which will help to give full play to the synergy.
3. Actively promote new business, the future is expected to become a new profit point to ensure the traditional main business at the same time, Zongdian actively promote aviation power, new energy and auto parts business. The subsidiary Zongshen Hangfa Company has completed the research and development and trial production of some new products, and has carried out or implemented cooperation on aero-engine maintenance and sales with a number of aviation enterprises. Among them, Zongshen Hangfa has signed a contract with Henan Sanhe Aviation to provide domestic aero-piston engines to Sanhe in the future. after this cooperation, Zongshen plans to manufacture an aviation power series covering 2-400HP within 3-5 years. Become a top service provider for drones and navigable aircraft power systems The operating scale and profitability of the auto parts business have also steadily improved, with sales of products such as automobile transmission, steering systems and lightweight structural components increasing significantly compared with the same period last year; in the new energy business, the company focuses on supporting the research and development of cutting-edge science and technology projects such as fuel cells and wireless charging technology, speeding up the progress of prototype development of related projects, and striving to achieve a breakthrough in the company's new energy business as soon as possible.
Profit forecast and rating
It is estimated that the net profit of 17-19 after the consolidated statement is 2.7,3.6 and 410 million yuan, and the corresponding EPS is 0.24,0.29,0.33 yuan respectively, and the corresponding PE is 31x, 26x and 22x respectively. The company's shares have not resumed trading and the company is given an investment rating of "prudent recommendation-A".
Risk hint: the industrial structure of the real economy is adjusted, and the progress of new business is not as expected.