Items:
The company announced on December 13 that the board of directors of Xingke Electronics (Hong Kong) approved the "motion on the sale of part of the equity interest in Easy Go by Xingke Electronics (Hong Kong)" and agreed that Xingke Electronics (Hong Kong) signed an "equity transfer agreement" with TWC ONEFUND LIMITED PARTNERSHIP, and Xingke Electronics (Hong Kong) transferred its 4110991 shares of Easy Go to TWC. After consultation and agreement between the two parties, the transfer price of the shares for sale is RMB 224766666. Our comments on the above incidents are as follows:
Comments:
The negative influence of Letv has been eliminated, and the assets of "debt-to-equity swap" have been quickly realized. This time, Xingke Electronics (Hong Kong) transferred its 4110991 shares of Easy Go to TWC at a price of 224766666 yuan. The company originally held 6166486 shares in Easy Go, which was completed on August 25, with a transfer ratio of 2 to 3. It is expected that the equity transfer will have a positive impact on 2018 net profit of 7 million yuan (the original debt value of this part of the shares is 215 million yuan, and the realization premium is about 9.5 million). The assets of "debt-to-equity swap" can be realized quickly, which provides more liquidity for subsidiaries while gradually promoting the complete solution of the debt problem.
Review of the "debt-to-equity swap" plan: replace 324.75 million of Letv's debt receivable with "easy access vehicle" equity. The company announced on August 22 that Letv Mobile commissioned Lucky and Wu Meng to pay 323 million yuan and 1.85 million yuan respectively to Xingke Electronics to realize the debt restructuring of Letv's accounts receivable. The implementation plan is: Lucky transferred 6.1275% equity of Easy Go to Xingke Electronics, with a transaction consideration of 322.9 million yuan; Wu Meng transferred 6.1275% equity of Oriental car Cloud to Xingke Electronics, with a transaction consideration of 1.85 million yuan. The transaction was implemented by Xingke Electronics (Hong Kong). After the completion of the transaction, Xingke Electronics cleared Letv's accounts receivable.
The traditional main business is sound, Xingke and table, the company's business prospects are bright. Traditional main business: the company has ploughed the modified plastics business for many years, and with the volume and profit of this sector increasing in the past year, it is expected that the annual growth rate of the main sector will be more than 50%, and the net profit will be 90 million yuan. And next year is expected to continue to receive leading dividends as the industry warms up. Xingke and table: Xingke operation is back on track. With the success of the customer diversification strategy, there is no longer the phenomenon of relying on a major customer to supply products to Hammer, customer A, OPPO, Meitu, XIAOMI and other brands. it is estimated that the net profit for the whole year of 2017 will be 1.3 billion yuan, contributing 1.2 billion to 130 million yuan to the parent company.
The rapid layout of cobalt resources highlights the determination to enter lithium electricity. In September this year, the company set up Jubilee Cobalt Industry and began its journey; in October, it signed a "strategic cooperation agreement" with Congo Huaxin Company to seek cobalt ore supply; and at the end of October, it found three more mining rights resources. The company has made frequent actions and rapid layout in the field of the new energy industry chain, which demonstrates the company's determination, confidence and execution in this business. It is expected that the above layout will greatly improve the company's profitability and provide important growth points in the long run.
Risk factors: 1. The competition of modified plastics and metal CNC industry intensifies; 2. The investment and development of cobalt and other metal raw materials is uncertain; 3. The price of raw materials fluctuates.
Maintain a "buy" rating. As the company calmed down the impact of Letv's debt crisis on itself, at the same time, we are optimistic about the good development of the company's traditional business and Xingke's new order volume, as well as the layout of the new energy industry chain, maintaining the company's annual EPS forecast of 0.41 PE in 2017-18-19. 1.10 yuan, according to the 2018 30 times PE, maintain the target price of 22.70 yuan, maintain the "buy" rating.
