Report highlights
Leading textile machinery companies are listed backdoor, and century-old brands are linked to A-shares
Saurer Intelligence is a world-leading provider of high-end textile equipment and solutions with a 100-year brand history. It is mainly engaged in R&D, production and sales of complete intelligent textile equipment and core components. In October 2016, Xinjiang Urban Construction issued a plan for major asset replacement and issuance of shares to purchase assets. In September 2017, asset transfer and additional share issuance were completed, and Saurer Intelligence was listed backdoor.
Saurer Intelligence - M&A integration undertakes global textile machinery giants
The Saurer (Saurer) brand originated from the Franz Saurer foundry established in 1853. Sura Group acquired Alma in 1960 and Raifu in 1991, thus becoming one of the leaders in the global spinning field; in 2007, Oerlikon acquired Sula Group, and the textile machinery business of Sula was merged into Oerlikon; in 2012, Jinsheng Industrial invested 60 million to establish Saurer Spinning Machinery, and in 2013, Saurer completed the acquisition of all assets and shares of Oerlikon's natural fiber spinning machine business and special spinning machine business. The name was changed to Saurer Intelligent Machinery Co., Ltd. on May 30, 2016.
Textile machinery: Downstream has been growing steadily over a long period of time, renewal and iteration+policy support to enhance short-term prosperity. The textile industry is related to the national economy and people's livelihood. Overall, it is still showing a gradual upward trend, which guarantees long-term demand for textile machinery. Looking at the short term: 1) As domestic labor costs continue to rise, the labor cost advantage is gradually weakening, and the operating pressure brought about by declining profitability has forced downstream textile enterprises to continue to increase their demand for automated production; 2) Since 2015, the Xinjiang region has introduced and implemented a series of relevant substantive policies such as cotton price subsidies, freight subsidies, electricity subsidies, employment and social security subsidies. Following the rules of cost advantage, new high-end production capacity is expected to gather rapidly.
Cyclical recovery is compounded by industrial upgrading, and world-class leaders have re-emerged, and Hangzulang Intelligence has formed many long-standing and world-renowned textile machinery industry brands such as Saurer (Saurer), Schlafhorst (Schlafhorst), Zinser (Zinser), Allma (Allma), and Volkmann (Volkmann). Currently, it has set up four major product lines for spinning, twisting, embroidery and special parts, covering the entire spinning industry chain. With a global sales network and continuous innovation and breakthrough technology accumulated in history, the company's scale and profitability are at the forefront of the world's largest textile machinery manufacturers. The company's operating income increased significantly in the first three quarters of 2017, and the net profit growth rate increased significantly. It is expected that the next few years will be used to maintain relatively rapid growth through the centralized construction of spinning production capacity in Xinjiang. Jin Sheng Industrial, the majority shareholder, has strong strength, and the synergies between its related industries are obvious. The company's net profit for 2017-2018 is estimated to be about 563 million yuan or 748 million yuan, EPS is 0.30 yuan/share, 0.39 yuan/share, and PE is 38 times and 29 times, giving it an “increase in holdings” rating.
Risk warning: 1. The textile industry policy in the Xinjiang region may change; 2. The expansion of the company's unaffiliated customers fell short of expectations.