Main points of investment
Investment event
Tianhua Yuan issued shares to Sinochem equipment Global Holdings Co., Ltd. to purchase 100% of its equipment in Luxembourg, and shares from Guilin Rubber Machinery and Yiyang Rubber Machinery to purchase its major operating assets and liabilities. Sanming Machinery and China Oak Automation issued shares to purchase its land, real estate, major equipment and other assets. The issue price of the assets purchased by the shares in this issue is 12.93 yuan and the assets to be purchased is 6.641 billion yuan, and a total of 513 million shares are issued to the other side of the transaction. At the same time, the company plans to raise matching funds through a non-public offering of shares, with a total amount of no more than 1.226 billion yuan and no more than 100% of the transaction price of the assets to be purchased. This transaction constitutes a related party transaction. Upon completion of the transaction, equipment Luxembourg will become a wholly-owned subsidiary of the Company, equipment Global will become the largest shareholder of the company, and the actual controller of the Company will still be ChemChina. This transaction constitutes a major asset restructuring, but does not constitute a restructuring listing.
Acquisition of KM Group to enter the first echelon of Global Chemical Machinery
KM Group is a global leader in the plastic and rubber processing machinery industry and a global leader in rubber equipment system solutions, with key products including injection molding equipment, extrusion equipment and reaction molding equipment. KM Group focuses on providing its customers with high-end customized products and comprehensive end-to-end solutions that can meet the customized needs of different customers around the world. In particular, the lightweight of the global automobile, the non-metallization of electric body and parts and the arrival of the 3C intelligent production era have brought unprecedented market growth potential for the development of KM Group.
KM Group has industry-class assets and leading profitability, with operating income of 1.21 billion euros in 2015, 1.27 billion euros in 2016 and 960 million euros in 2017. In the future, with the coordination of technology, production capacity, sales and management with KM Group, profitability will be effectively improved, and part of KM Group's business in China will be undertaken to improve KM Group's ability to localize in China. Through the acquisition of KM Group, a subsidiary of Sinochem, Tianhuayuan has entered the first echelon of China Sculpture Machinery. We expect the company to improve its profitability by digesting and absorbing KM Group's plastic and rubber machinery technology and improving its management.
Acquire five chemical machinery assets of Sinochem and establish the company as the listing platform of Sinochem equipment.
In addition to KM Group, it also acquired the assets of four other statue machinery factories of Sinochem, Guilin Rubber Machinery, Yiyang Rubber Machinery, Sanming Machinery and China Oak automatic Control. Through the acquisition of the assets of KM Group and four domestic rubber machinery companies, ChemChina injected 100% of its KM Group and the assets of four domestic rubber and plastic machinery companies into Tianhuayuan to strengthen its position as a listing platform for ChemChina's chemical equipment, not only to solve the problem of inter-industry competition of listed companies, but also to effectively integrate resources to expand and strengthen the chemical equipment sector of Sinochem.
Resource integration to improve the company's core competitiveness of plastic and rubber machinery, profitability is expected to improve
Through the acquisition of Sinochem's five statue machinery assets, Tianhuayuan has become the listing platform of ChemChina's chemical equipment. Compared with the gross profit margin and net profit margin of the plastic and rubber machinery business of Haitian International and Izumi, we find that the gross profit margin and net profit margin of KM and four other enterprises are seriously lower than those of their peers. We look forward to the improvement of profitability and market share as a result of the integration of chemical equipment resources under ChemChina.
Investment rating
Assuming that this acquisition is smooth, and taking into account the matching financing to issue additional shares, it is estimated that the net profit of the preparatory examination in 2017-2019 is 0.14.10\ 452 million yuan, EPS is 0.010.40\ 0.44 yuan respectively, and PE in 2018 and 2019 is 29.55\ 26.81x respectively, covering for the first time and giving the rating of overweight.
Risk hint
1, acquisition failure 2, SFC failed audit risk 3, promised performance is not up to expectations, goodwill impairment
