The merger and acquisition of Qingtou was implemented smoothly, and additional shares were listed
On January 25, the company issued an announcement stating that on January 15, 2018, the Shenzhen branch of Zhongdeng Company issued a “Certificate of Acceptance of the Share Registration Application”. It has been confirmed that the additional shares issued will be registered and received at the end of the trading day before the listing date of this batch of shares, and will be officially included in the shareholder register of the listed company. The 13,634,054 shares newly issued in this transaction have been approved by the Shenzhen Stock Exchange for listing on the Shenzhen Stock Exchange on January 29, 2018. The merger and acquisition of Qingtou Intelligence is beneficial to the company's main business to form a good synergy effect. For example, the EPS after full dilution in 2017-19 is expected to be 0.18/0.74/0.90 yuan; the reasonable price range is 30.3-35.5 yuan, corresponding to 41-48 times PE in 2018, maintaining the “buy” rating.
Qingtou Intelligence specializes in intelligent display control and intelligent equipment manufacturing. Business collaboration between the two parties is expected to achieve a win-win situation
The main products of Qingtou Intelligence include large screen display control systems, smart gun lockers, intelligent robots, smart skiers, and confidential lockers. In 2016, Qingtou Intelligence achieved revenue of 242 million yuan, an increase of 30.93% over the previous year; Guimu achieved net profit of 36.24 million yuan, an increase of 26.13% over the previous year. The original shareholders Wang Zhan and Chuangzhi Tianxia promised that the net profit of Qingtou Intelligence in 2017/18 was 55 million yuan/70 million yuan respectively, with a cumulative total of no less than 215 million yuan over the three years from 17-19. According to Qingtou Smart's performance promise, the company's revenue and net profit will be greatly increased after the merger, and it is also expected to be integrated with the company's original business.
Complementarity forms synergies, and synergies can be expected
At the sales level, the products of the two companies are sold together, making mutual use of customer resources to create synergies and achieve common development. At the product level, the company's traditional business can introduce Qingtou Intelligent's intelligent screen control technology to achieve an “unmanned factory”; the delivery robot being researched and developed by Qingtou Intelligence complements Xinyuan Technology's pneumatic conveying system: it focuses on the transportation of large items and small particles and powdery items respectively; the company's environmental protection business is also expected to collaborate with intelligent display control and robots.
Main business picked up, mergers and acquisitions were implemented smoothly, and the “buy” rating was maintained
The company achieved revenue of 168 million yuan in the first three quarters of 2017, an increase of 63.37% over the previous year; it achieved net profit of 6.1076 million yuan, an increase of 24.48% over the previous year. The main business is expected to bottom out as its industry recovers. The company's main business is expected to grow at a net profit rate of more than 30% throughout the year. The company's intelligent plan for mergers and acquisitions has been approved by the Securities Regulatory Commission. Assuming that the acquisition and merger can be completed in January 2018, the EPS after full dilution in 2017-19 is expected to be 0.18/ 0.74/0.90 yuan; the reasonable price range is 30.3-35.5 yuan, corresponding to 41-48 times PE in 2018, maintaining the “buy” rating.
Risk warning: risk of macroeconomic fluctuations; risk of merger failure; risk of post-merger integration falling short of expectations.