Items:
The company issued a notice: it intends to issue shares to purchase 100% equity of Yinguang Minbao from Poly Jiulian Group and Yinguang Group, 100% equity of Panjiang Minbao from Panhua Group, Industrial Investment Group and Wengfu Group, and 94.75% equity from Panhua Group and Kaishan blasting, with transaction amounts of 471 million yuan, 503 million yuan and 137 million yuan respectively, totaling 1.112 billion yuan.
Main viewpoints
1. The situation of this transaction: the profit scale is 102 million, and the acquisition corresponds to 11 times of the 2017 PE
According to the released plan, the 17-year net profits of Yinguang Min Bang, Panjiang Min Bang and Open Source Min Bang are 35.3174 million yuan, 54.8699 million yuan and 11.6006 million yuan respectively, totaling 102 million yuan, while the 17-year PE of this acquisition is 13x, 9x and 12x respectively, with a comprehensive PE 11x.
two。 Information of the underlying company:
(1) Yinguang civil explosion: the main products are emulsion explosives and on-site mixed porous granular ammonium oil explosives. The permitted production capacity of explosives is 68000 tons, including 64000 tons in Shandong and 4000 tons in Xinjiang. (2) Panjiang civil explosion: the main products are four kinds of industrial explosives and detonators, including emulsion explosives, expanded ammonium nitrate explosives, porous granular ammonium oil explosives and on-site mixed porous granular ammonium oil explosives, with a permitted production capacity of 125500 tons, of which 96000 tons are in Guizhou and 29500 tons in Shandong.
(3) Open source blasting: mainly engaged in blasting services, including mining and stripping blasting services, infrastructure construction blasting services (blasting of airports, highways, light rail, shantytowns, etc.), with first-class qualification of blasting operation unit and second-class qualification of general contracting of mining projects, etc., the main business is in Guizhou.
3. Jiulian development: the acquisition has doubled the production capacity, and the competitive advantage of civil explosive integration has been continuously strengthened.
Jiulian Development is the largest civil explosive equipment production enterprise in Guizhou Province, and it is also one of the enterprises with the most complete variety of domestic civil explosive equipment products. The total sales value of the company accounted for 13.35% of the national civil explosive equipment market in 2016, ranking first among civil explosive equipment manufacturing enterprises in Guizhou Province. After the completion of this transaction, the explosive production capacity of the company will increase by 193500 tons to 402500 tons, and the production capacity of industrial detonators will increase by 80 million units to 210 million units, and the company's scale advantage and competitive advantage will be more obvious.
In addition, the company has been striving to build the integrated operation of "scientific research, production, sales and blasting service". The company has the first-class qualification of professional contracting for blasting and demolition, the first-class qualification for professional contracting for earthwork engineering, and the first-class license (business) for blasting operation units. The acquisition of the target related blasting service company has further strengthened the comprehensive strength of the integrated operation of civil blasting.
4. Poly Group: the strategic orientation of civil explosion will not change, and the integration of civil explosion industry will continue to advance.
Poly Group maintains its position as the core strategic plate of the Group's "13th five-year Plan". It is the only central enterprise with civil explosion as one of its main business, and Jiulian Development is the only platform for its civil explosion business. With the help of Poly's platform, resources, channels and other advantages, as well as the coordinated development of Poly Group's related civil explosion business and military and civilian products business, Jiulian will continue to lead the process of horizontal integration, vertical integration and internationalization of the civil explosion industry. to the goal of an international civil explosion giant.
5. Investment suggestion
We estimate that the company's net return profit from 2017 to 2018 is 80 million yuan and 210 million yuan respectively, EPS is 0.24 yuan and 0.64 yuan, corresponding to PE is 52x and 19x (the current industry average valuation is 48x). The company is a leading enterprise in the civil explosion industry, which is expected to lead the process of cross-regional integration and internationalization of the industry, with continuous improvement at the bottom of the fundamentals. Maintain the "push" rating.
6. Risk hint
The demand of civil explosion is low, and the industry integration is lower than expected.