Report guide
The company announced on April 9 that it had reached an equity acquisition letter with Guangdong Hongshi Electronic Materials Technology Co., Ltd., intending to acquire 100% equity interest in Hongshi Technology by issuing shares and paying cash. The specific mode of transaction is still under negotiation and has not yet been finally confirmed.
Main points of investment
Hongqing is a leading enterprise of electronic functional materials in China.
Hongqi Technology belongs to the electronic functional materials industry, and its products are widely used in electronic and electrical, 3C industry, die-cutting industry, medicine, logo, auto parts and interior decoration, decoration and construction industry, electronic communications and other fields. Benefiting from the growth of downstream consumer electronics, automotive and other industries, the electronic functional materials industry has more room for development. Hongstone used to be the supplier of release paper, release film and conductive cloth of 3M Company Company. after more than a decade of development, it has independently developed glue technology, breaking the monopoly of foreign adhesive technology. compared with traditional glue in material utilization, production efficiency, product yield are in the domestic leading level. At present, its main customers include Foxconn, Apple Inc, Samsung, Huawei, BOE and so on, and plan to break into car manufacturing, car beauty and other fields.
The company's acquisition of Hongshi can achieve a win-win effect.
We believe that if the company can successfully acquire Hongshi Technology, it can not only meet the functional materials needed by its original business and open up the upstream and downstream, but also expand the customer base of the original business through Hongsheng. in order to enhance the market and profitability of the company's traditional business. From Hongshi point of view, through the industry veteran listed companies such as the company, we can strengthen Hongshi's brand influence, and can also get sufficient capital and other resources support in the period of rapid development. If this merger is successful, it will achieve a win-win effect.
Profit forecast and valuation
Without taking into account the extension, we expect that from 2018 to 2020, the company will achieve revenue of 4.5 billion, 6 billion, 7.5 billion, net profit of 110 million, 145 million, 212 million, EPS0.13 yuan, 0.17 yuan, 0.25 yuan.
We believe that the company is at a turning point in its development and will have a high growth rate in the future, giving it a "overweight" rating.
Risk hint
Traditional business orders are lower than expected, photovoltaic supply progress is lower than expected, and intelligent system sales are lower than expected.