Event
On May 10, the company received a partial offer from Gree Group. Because it is optimistic about the future development of the company, Gree Group decided to launch a partial offer to all the shareholders of the company to acquire part of the company's shares in the form of an offer. The purpose of this tender offer is not to terminate the listing status of the listed company.
Brief comment
Gree Group has been actively seeking to enter the field of new energy vehicles.
Gree's attempt to buy Zhuhai Yinlong two years ago ended in failure, but the two continued to cooperate. Now the proposed acquisition of Changyuan Group shows that it is still optimistic about the new energy vehicle industry.
The company's electric vehicle layout has achieved initial results, and it has been accepted that the company has entered the field of new energy vehicles in the past 15 years and has grown rapidly through mergers and acquisitions. At present, it has four subsidiaries, namely, Hunan Zhongli, Changyuan Electronics, Changyuan Huasheng and Changyuan Wei'an, which focus on this field, and have obvious advantages in high-end wet diaphragm, electrolyte additives and automotive electronics.
In 2017, the electric vehicle sector had revenue of 2.038 billion yuan, gross profit of 805 million yuan, and gross profit margin of 39.51%, accounting for about 1/4 of the company's revenue and gross profit. The receipt of Gree's offer shows that the company's industry status has been recognized.
There is potential synergy in the company's intelligent factory.
The intelligent factory business is mainly composed of Yataili, Changyuan and Eagle. In 2017, it realized operating income of 2.431 billion yuan, gross profit of 1.271 billion yuan, and gross profit margin of 52.29%, contributing 1/3 of the company's revenue and profit. The company has rich experience in automatic testing, which can bring synergy to Gree.
The power grid equipment business has little to do with this acquisition.
Power grid equipment is one of the company's three major businesses, contributing 2.894 billion yuan in operating income, 1.227 billion yuan in gross profit and 42.41% gross profit in 2017. It is mainly composed of Changyuan Shenrui, Changyuan Electric Power, Changyuan High Energy and Changyuan Co-creation, which mainly covers the fields of power generation, transmission, power transformation and power distribution, and is expected to have little to do with this acquisition.
Keep a close eye on the progress within five days
Gree Group will provide the company with a summary of the tender offer report within five days, and the company also said that it will announce the progress of the matter within five days, and we will continue to monitor closely.
It is estimated that in 2018-19, the EPS will be 1.04,1.30 respectively, and the corresponding PE will be 17 and 13 times respectively, maintaining the "buy" rating, with a target price of 22.00 yuan.
Risk tips: 1) the progress of the tender offer is not as expected; 2) the policy risk of new energy vehicles.