Event
The company released its semi-annual report that its revenue in the first half of 17 years was 1.469 billion yuan, up 22.13% from the same period last year, and the net profit returned to its mother was 48.1089 million yuan, down 47.83% from the same period last year. At the same time, the company adjusted the acquisition of CALIENT Technologies plan, the proportion of equity acquisition was reduced to 51%, the transaction consideration of US $148 million, is no longer recognized as a major asset restructuring, and will resume trading tomorrow.
Our comments are as follows:
The company has perfect layout in radio frequency devices, automotive precision parts and consumer electronic structural parts industry. The domestic demand for RF devices is slowing down, and the overseas market is gradually expanding. Auto parts into the Tesla, Inc. supply system, consumer electronics to OPPO and other domestic mobile phone manufacturers supply, metal structure business continues to grow rapidly.
Due to the gradual completion of domestic base station coverage, the continuous decline in base station construction, and the entry of subsidiary Matt Communications into the NSN and Ericsson supply systems, the growth of demand in overseas markets, especially in India, complements the RF device business, with revenue down 9.22% in the first half of the year compared with the same period last year. Auto parts business successfully entered the Tesla, Inc. supply sequence, greatly improving the company's brand image; in the field of consumer electronics, the company supplies to OPPO and other major domestic mobile phone manufacturers. Benefiting from the continued growth in sales of new energy vehicles and the continuous increase in the share of domestic mobile phones, the company's metal structure business continued to grow rapidly, with revenue up 24.76% in the first half of the year compared with the same period last year.
During the reporting period, a number of cash acquisitions resulted in larger financial expenses, the profits of the underlying company have not yet been revealed, and the rate of short-term financial expenses has significantly increased as a drag on performance. In the medium and long term, with the continuous release of production capacity of pre-determined additional investment projects and the completion of acquisition target integration, the company's performance is expected to re-enter the rapid growth channel.
During the reporting period, the company acquired Zehong Technology with 300 million cash, Kaimao Technology with 120 million cash, Huaxinke and World Style with 440 million cash. A large number of cash acquisitions resulted in a significant increase in financial costs by 5.88 times, which is a drag on short-term performance. The company's acquisition targets are closely around the main business, the layout of glass screens, consumer electronics surface treatment and other areas, while the company has invested an additional 870 million yuan to expand the production capacity of radio frequency devices and consumer electronic components. With the continuous release of production capacity and the completion of the integration of acquisition targets, the company's performance is expected to gradually return to rapid growth.
The company adjusts its Calient acquisition plan, and the acquisition ratio is reduced to 51%, which does not constitute a major asset restructuring.
Calient has the core technology of 3D MEMS optical switching switch, which is a necessary device for large-scale data center to realize all-optical network.
The total price of the acquisition is US $148 million, with an advance payment of US $100 million, and the remaining price is calculated by installments based on the achievement ratio of US $1057 and US $23.24 million of the 18-and 19-year EBITDA to the target. Calient holds more than 60 patents for 3D MEMS optical switching technology, which replaces traditional electrical switching equipment and greatly improves the switching speed. It is the core device of high-speed all-optical network in large data centers. With the continuous improvement of data center transmission rate, there is a broad market space for Calient products.
The layout of the company's RF devices, automotive precision structural parts and consumer electronics structural parts is perfect, RF devices develop steadily, and structural parts supply to Tesla, Inc., OPPO and other leading customers, which is expected to continue to grow rapidly. With the gradual release of production capacity and the completion of the integration of acquisition targets, the company's expense rate will return to the normal level and the performance will return to the rapid growth channel.
It is estimated that the EPS in 17-19 will be 0.10,0.12 and 0.18 yuan respectively, giving it a "hold" rating.
Risk hint: the progress of capacity release is slower than expected, and the integration effect of M & A target is lower than expected.