The current situation of the company
On March 3, 2020, the company issued an announcement that the controlling shareholder, Jiangsu Shenghe Investment and its concerted actor, Shanghai Beili, signed a "share transfer intention Agreement" with Jingdezhen Taowen Travel Group. 29.99% of the total share capital was transferred to Tao Wenlun at a consideration of 1.239 billion yuan, with a trading price of about 13.7 yuan per share, a premium of 50% over the closing price before the suspension. After the completion of the transaction, the controlling shareholder will be changed from Shenghe Investment to Tao Wenrui Group, and the actual controller will be changed from Chairman Jin Yueyue to Jingdezhen SASAC, and the original controlling shareholder and its concerted actors will need to cooperate with Tao Wen Brigade to conduct a re-election of the board of directors. Tao Wen Brigade may nominate 5 of the seven members of the board of directors after the re-election. in addition, Tao Wen Brigade has the right to recommend candidates for the Chief of Finance and the Director of the Office of the Party Committee.
We believe that the management of the company will remain stable and the business will operate normally.
On March 3, 2020, the company issued an announcement that Shanghai Beili pledged all its shares to Tao Wen Brigade to provide a guarantee for the 220 million yuan in good faith money that Tao Wen Brigade will pay later.
Comment
Jingdezhen Tao Wen Tour Group, which belongs to Jingdezhen State-owned assets Supervision and Administration Commission, has a number of cultural tourism and supporting real estate projects in Jingdezhen, which is the backbone of Jingdezhen's core industry. In 2019, Jingdezhen announced that it would invest 103.5 billion yuan in 2019-2021 (84.6 billion yuan for GDP in 2018) in 152 cultural, tourism and real estate projects to build a "National Ceramic Cultural inheritance and Innovation pilot Zone". The investment was mainly completed through local leading state-owned enterprises, especially mentioned that the government fully supported strengthening a number of backbone enterprises such as Jingdezhen Tao Wentuan Group, and supported and promoted the listing of Tao Wentuan Group.
Pay attention to the business synergy potential after the acquisition, the core is the business development in the field of special commodity logistics. Relying on the industry experience and financial and commodity support of Tao Wen Travel Group, we believe that Yingfei can obtain: 1) deterministic order support, the intelligent manufacturing and integrated logistics related equipment and systems of the local ceramic industry are expected to use a large number of Yingfei products. 2) the valuable opportunity to extend industrial coverage downstream, from an equipment manufacturer to an integrated service provider, to build a logistics warehousing center to serve the cold chain warehousing of agricultural products and the intelligent warehousing of ceramic e-commerce; 3) continuous asset injection. Tao Wen Travel's related projects are expected to be gradually injected into listed companies to improve asset quality.
Valuation proposal
We maintain the earnings forecast and maintain the neutral rating for the time being, but remind investors to pay attention to the upside opportunities brought about by the high premium acquisition of state-owned assets. Due to the upward movement of the market valuation center and the business synergy that may be brought about by state-owned shares, the target price will be raised by 53% to 11.5 yuan. Corresponding to 34.4 times 2019 price-to-earnings ratio and 32.7 times 2020 price-earnings ratio, the current stock price has 14% upward space compared with the target price.
Risk
The epidemic lasted longer than expected and steel prices fluctuated sharply.