Events:

The actual control of the company, Humanities Kaifu, signed the "share transfer Agreement" and transferred a total of 469 million shares (15% of the total share capital) of the company with its shareholders to Fujian Electronic Information Group. Its Chinese Kaifu transferred 154 million shares (4.93% of the total company shares), and other shareholders transferred 315 million shares (accounting for 10.07% of the total company shares). After the transfer is completed. The actual controller of the company was changed to Fujian Electronic Information Group.

Main points of investment:

The introduction of state-owned assets to alleviate the major shareholder pledge fund dilemma. The transfer of the company's shares is expected to solve the current dilemma of the company's tight capital chain: first of all, the minimum price of this transaction is 6.86 yuan per share, which is about 22% premium to the share price on the date of the announcement. The total amount of funds obtained from the transfer of shares will not be less than 3.2 billion yuan. The acquisition of this fund can better alleviate the systematic risk of shareholders' higher ratio pledge in the current market environment, and at the same time inject new momentum into its daily operation. In addition, the introduction of the state-owned assets background will give the company a higher bank credit rating, which will enable the company to have better financing capacity, provide a good guarantee for the capital needs of the follow-up development, and effectively reduce the company's financial expenses and improve the company's profits.

The company's business is in line with the setting of Fujian state-owned assets. In recent years, Fujian Province has vigorously supported the development of the electronic information industry. Fujian Electronic Information Group is a wholly state-owned asset management company and investment platform in the electronic information industry funded by the Fujian Provincial people's Government. From the overall planning, intelligent terminals and LED semiconductors, as well as 5G and other related industries are the focus of its layout. It has controlled or invested in a number of listed electronics companies, such as Furi Electronics, Huaying Technology, Ashicuang Optoelectronics, Star net Ruijie, and so on. In the semiconductor field, it has also jointly invested in Quanzhou Jinhua, Putian Fulian, Xiamen Lianxin, Fuxin Electronics and other enterprises, which shows the depth of the strategic deployment.

Helitai has been deeply engaged in intelligent terminal components since its inception, relying on the "1cm N" customer cooperation model, the product line has been expanded to a variety of intelligent terminal core modules, such as comprehensive screen module, touch screen module, fingerprint identification module and camera module, at the same time, the company is actively vertical integration to the upper reaches of the industrial chain, and some important components and raw materials basically achieve internal supply, such as FPC and soft-hard plywood required by various modules. From the perspective of the industrial chain structure, Helitai is located downstream of the panel and semiconductor industries deployed by Fujian Electronic Information Group. If this share transfer can be successfully completed, it will be a very effective extension and supplement to the industrial layout of Fujian Electronic Information Group.

The logic of fundamental growth is still maintained, and a number of layouts are waiting to bloom. Fujian Electronic Information Group, as the transferee of this share transfer, promised not to deliberately interfere with the company's business activities, so the basic logic of the company is still established, and the early layout is expected to gradually usher in the performance release: (1) in terms of wireless charging, the company relies on Lanpei's nanocrystalline materials to enter the market, combined with the technology reserve of FPC, actively extends downstream modules and even transmitter products to achieve nanocrystalline strips. The whole industry chain layout of nanocrystalline magnetic separator production, coil design / production, receiver / transmitter module production, transmitter finished product production, once the wireless charging market ushered in accelerated growth, the company is expected to benefit (2) in terms of e-paper, the company deeply binds the upstream e-ink film suppliers (Yuantai Technology, etc.) and downstream electronic label system architecture enterprises (Hanshuo Technology), and now has Walmart Inc, Yonghui, Wumart, Bailian and Auchan and other high-quality end users. In the future, with the popularity of new retail models such as O2O and unmanned retail, it is expected to become a new supporting point for the company's performance growth. The company promises that the net profit from 2018 to 2020 will not be less than 1.356 billion yuan, 1.492 billion yuan and 1.611 billion yuan respectively under the premise that the transferee does not interfere with the normal operation.

Profit forecast and investment rating: the Buy rating Company has been committed to the horizontal and vertical integration of the product line. The customer cooperation model of "1x N" provides the driving force for the company's performance growth. at present, the company's integrated multi-product supply capacity has gradually been recognized by mainstream customers at home and abroad, and has also established a good cooperative relationship with Samsung and HOVM, increasing the share of front-line customers. Contribute to the growth of the company's performance in the short term In the medium and long term, the company will actively lay out the application fields of wireless charging and Internet of things IOT to seek new breakthroughs for future performance growth. This share transfer has successfully solved the capital and equity pledge dilemma that the company may face in the current market, sweeping away the previous market worries and haze about the company's related fields. it also paves the way for future development (the integration of financing investment and industrial chain). The company is expected to continue to accelerate on the original track, and it is expected that the company will achieve net profits of 1.45 billion, 1.64 billion and 1.85 billion respectively from 2018 to 2020. The current share price corresponds to PE of 12.12,10.71,9.48 respectively, maintaining the buy rating.

Risk tips: 1) the uncertainty of equity transfer; 2) the decline of the company's customer product shipments brought about by the downturn in the smartphone market; 3) the application and penetration of wireless charging in the smartphone scenario is not as expected; 4) the capital chain problems of downstream customers in the current market background cause bad debt losses to the upstream supply chain enterprises; 5) the company's commitment performance in the next three years is lower than expected due to force majeure factors.