Summary of the report mm:
Acquire KM Group to build Sinochem's high-end chemical equipment manufacturing platform
Tianhua Institute is a chemical equipment manufacturing platform under Sinochem, and the Chinese Academy of Chemical Sciences, a major shareholder, holds a stake of 51.56%. Since 2005, Sinochem has successively acquired core assets around the world and injected them into the nine listed companies it controls, such as the acquisition of Andisu, Okla, Kenos, Andorra, Syngenta, etc., and has created a pioneer in the agrochemical industry, such as Shalunda, which has changed the global competition pattern in the industry. At the beginning of 2016, Sinochem announced the acquisition of German rubber plasticizer manufacturer Klaus Maffei Group for 925 million euros, injecting injection molding machines and other related assets into Tianhuayuan to create Sinochem's high-end chemical equipment manufacturing platform.
Klaus Murphy is the first echelon in the global injection molding industry.
KM is the global rubber and plastic machinery leader of the century-old brand, headquartered in Germany, covering injection molding equipment, extrusion equipment and reaction molding, with a global market share of about 15%. Downstream customers are concentrated in automotive, packaging, infrastructure, rubber and chemical industries. According to the forecast of World Plastics Machinery Research and KM Group's 2016 market survey, the global injection molding machine output value in 2017 is 8.482 billion euros, and the Chinese market size is about 30 billion yuan, maintaining a compound growth rate of 5.6% in the past decade, which is higher than the global growth rate of 4.2%. Raw materials such as iron and steel account for 70% of the company's production costs. in the face of rising upstream steel prices, the company's sales gross profit margin increased instead of falling in the first three quarters of 2017, increasing by nearly 2 percentage points, with strong cost control ability; Q3KM deducted non-net profits in 2015, 2016 and 2017 were 20.37 million euros, 34.19 million euros and 26 million euros respectively. 2017Q3KM has a revenue of 958 million euros and a net profit rate of only 2.7%, which is significantly lower than that of domestic listed companies in the same industry, such as Haitian International, which is 18.7%. It is expected that with the rapid expansion of business in China, KM net interest rate has a lot of room for improvement.
Automobile lightweight and 3C high growth factors drive the import substitution of high-end injection molding machines. The Chinese market has great potential.
The domestic production rate of domestic injection molding machines is 81%, and high-end injection molding machines still rely on imports. With the lightweight of electric vehicles, the high growth of 3C and the increase of household appliance plastic consumption, the domestic demand for high-end injection molding machines, especially high-end injection molding machines, remains strong. 17Q3 injection molding machines maintain a growth rate of more than 30% on behalf of enterprises. At present, KM China accounts for 9% of revenue. KM's overseas business is expected to maintain a compound growth rate of 6% in the next three years, with growth rates of 30%, 20% and 20% respectively in China in the next three years. With the launch of new production capacity, China is expected to account for 16% of revenue in 2020.
Raise 1.266 billion yuan for production capacity improvement and intelligent transformation of injection molding machine
At present, the share capital is 411 million shares, and it is proposed to issue an additional 514 million shares in private. The issue price: 1.293 yuan per share, raising funds of 1.226 billion yuan, mainly used for: Germany KM production capacity improvement project, investment of 500 million; Sanming advanced intelligent injection molding machine manufacturing base project, investment of 260 million; Yiyang rubber machinery digital factory upgrading project, investment of 200 million Guilin rubber machine digital green manufacturing capacity enhancement project, with an investment of 200 million. It is expected that with the smooth launch of new production capacity and the opening of the Chinese market, the company's revenue will maintain a steady growth momentum.
Profit forecast
According to the diluted share capital, the company's operating income in 2017-2019 is expected to be 5.49 yuan, 119.35 yuan and 12.902 billion yuan respectively, the net profit returned to the mother is 0.3,5.10 and 617 million yuan respectively, the EPS is 0.07,0.55 yuan and 0.67 yuan respectively, and the corresponding PE is 199.6x, 26.5x and 22.0x respectively.
Risk hint
There are risks in post-merger integration; domestic market development is not as expected.