Main points of investment:
The company intends to purchase 65% of the shares in the chain. The company announced that it intends to buy 65% of the shares of the new third board cross-border e-commerce enterprise price chain with 1.01 billion yuan in cash, with an overall valuation of 1.56 billion yuan. The original shareholders of the price chain promised that the net profit for 2017-19 would not be less than 10, 600, 000, 600, 000, 100, 000, As a result, the company has determined the double main business strategy of "zipper + cross-border e-commerce", which is a solid step for the company to break through the bottleneck of traditional manufacturing and expand new industries.
Cross-border e-commerce exports B2C industry trillion market to be tapped. In 2016, the size of China's cross-border e-commerce market reached 6.7 trillion yuan, and the export portion reached 5.5 trillion yuan, of which the scale of cross-border export B2C exceeded 600 billion yuan. According to BABA Research Institute, the market size will exceed 2 trillion by 2020, and there is a huge market space to be tapped. At present, China has more than 5000 cross-border platform enterprises and more than 200000 foreign trade enterprises that carry out cross-border e-commerce through the platform.
Structural growth determines that the industry has huge room for growth. China is a big country in global export trade, but in the environment of intensified competition in the manufacturing industry, the traditional export situation is grim. The CAGR of general trade exports in 2011-16 is 2%. By contrast, the export scale of cross-border e-commerce has increased year after year, with the market size growing from 1.7 trillion yuan in 2011 to 5.5 trillion yuan in 2016, with a CAGR of 27% in 2011-16. The structural growth of exports is mainly due to: 1) the low price of products made in China; 2) the popularization of electronic information technology brings wider customer coverage and higher transaction efficiency; 3) the flattening of transactions removes the traditional middleman links, reduce channel costs and reduce prices while shortening transaction time.
"the chain of price": the water seller in the gold rush era. Price chain has been engaged in cross-border e-commerce business since 2009, based on Shenzhen industrial cluster, selling 3C electronics, home outdoor, and automobile peripheral products. The company founded its own brand "DBPOWER", followed the line of high-quality products and increased gross profit margin. Since 2016, the company has expanded its business from goods sales to cross-border e-commerce services, and has become a comprehensive cross-border e-commerce enterprise. Through the acquisition and development of Amztracker, global trading assistant, Amazooka, MerchantMetrics.io and other software tools to strengthen the company's ability to provide analytical marketing, drainage promotion, product evaluation, sales management, order management, inventory management and other services. At the same time, organize offline industry celebrities forum, exchange salon, to create an integrated ecological service circle. The operating income of the price chain reached 457 million yuan in 2016, an increase of 232% over the same period last year, and the net profit was 54.79 million yuan, an increase of 521% over the same period last year. The overall gross profit margin in 2016 was 56.5%, an increase of 11pct over the same period last year, and a net profit margin of 12.0%, an increase of 5.6pct over the same period last year.
Profit forecast and valuation. The position of the company's zipper and button business industry is stable, and the stable growth is expected. at the same time, the price chain is located in the cross-border export e-commerce industry with rapid growth. We estimate that the EPS in 2017-19 will be 0.42, 0.65, 0.89 respectively. As the cross-border business is expected to maintain high growth in the future, we give a price-to-earnings ratio of 25X in 2018, with a "buy" rating corresponding to the target price of 16.34 yuan.
Risk hint. The competition pattern in the industry has intensified, overseas trade frictions and acquisitions have fallen short of expectations.
