For the first time, coverage gives a "buy" rating. In 2017, the company launched the acquisition of GlobalSwitch (hereinafter referred to as GS), the top five IDC giant in the world and the second in the Asia-Pacific region. With the start of 5G construction and the outbreak of traffic, the demand for cloud computing is on the rise, and the cloud industry chain becomes the main line of future investment. As the infrastructure of data storage and computing, IDC has a prominent strategic position, and the layout of IDC is the layout of the future.
The home core answers 5 questions:
1. What is the quality of GS assets?
Scarce overseas IDC M & A targets. (1) the global first-tier cities are stuck in advance, and the reserve project can maintain the company's long-term and stable growth. According to the company's plan to increase in 2018, GS has 11 data centers in 8 international first-tier cities on 3 continents in Asia, Europe and Australia, with a total power capacity of 371MVA. From 2018 to 2020, it plans to add 156MVA power capacity, an increase of 42 per cent over the current level. (2) strong profitability: the volume of revenue ranks in the top five among global IDC companies; according to the EBITDA rate, it is 69%, 69% and 70% from 2015 to 2017, ranking first in the global echelon. (3) low cost of capital: the credit rating of the same industry ranks highest in the world, with 6.5-year 500 million euro bonds and 10-year 500 million euros bonds issued in 2017 with coupon rates of only 1.5% and 2.25%.
2. What will be the future of GS
The main results are as follows: (1) the overseas expansion is accelerated and the epidemic situation can be catalyzed. After the equity settlement due to the slow expansion of the equity delivery GS, it is expected to return to growth of more than 10 per cent in 2020-2022. Considering the demand for cloud computing accelerated by overseas outbreaks, GS may expand more than expected. (2) Luozi China. GS's previous business focused on Europe and Southeast Asia, and after the integration with Shagang, we judge that GS is expected to rely on the domestic settlement of the group and enjoy 5G growth dividends. (3) "Belt and Road Initiative" sea platform, data security infrastructure. Relying on overseas core IDC resources, GS will become a data service platform for "Belt and Road Initiative" domestic enterprises to go abroad and overseas enterprises to enter China.
3. How does IDC value the impact of differences in accounting standards at home and abroad?
Because of the differences in accounting standards at home and abroad, Global Switch carries on the fair value evaluation according to the investment real estate every year, which is reflected in the profit in the form of fair value change profit and loss, with less depreciation and amortization. Domestic IDC is evaluated on the basis of fixed assets, and annual depreciation and amortization has a serious impact on net profit, which can not reflect the actual operating situation of the company. Therefore, from a global comparable point of view, the actual profitability of IDC generally refers to EBITDA and EBITDA rates, and relative valuation refers to EV/EBITDA.
4. Asset injection price of 51% equity in GS
(1) in the latest fixed increase plan for 2018, Suzhou Qingfeng (51% stake in GS) is based on December 31, 2017, with a transaction price of 23.8 billion yuan, corresponding to an EV/EBITDA of 19.6X in 2017. (2) in the first edition of the 2017 fixed increase plan, the target price is 22.9 billion yuan based on December 31, 2016. (3) the actual transaction pricing may be adjusted according to the 2019 audit results.
5. If Suzhou Qingfeng (51% stake in GS) is injected according to the fixed increase plan in 2018, how to predict the market capitalization?
Under the segment valuation method: according to the 2020 profit forecast, the main steel industry is valued at about 5 billion yuan, the equity value of GS 51% is about 56.7 billion yuan, the cash and equivalents of the parent company 2019Q3 is about 4 billion, and the assets are valued at 65.7 billion yuan. Where:
(1) the main business assumes that the net profit in 2020 is 370 million, and the industry average PE 9X; considering that Shagang Group is expected to eliminate inter-industry competition in recent years, the capital operation expectation is strong, and a certain valuation premium is given, with a target market value of 5 billion corresponding to PE 13x in 2020.
(2) profit from M & An assets: EBITDA in 2018 is about 274 million pounds, and 2019 data has not been disclosed. Considering the changes in equity structure, according to conservative operating assumptions, the company's EBITDA growth rate in 2019 is 10%, corresponding to 2019 EBITDA 300 million pounds, corresponding to the current exchange rate corresponding to about 2.71 billion yuan.
(3) reasonable valuation of M & An assets: based on EBITDA in 2019, the current average EV/EBITDA of A-share IDC is 37.4X, taking into account the scarcity and potential growth of GS, as well as the layout of the Internet and Belt and Road Initiative, give a certain valuation overflow, the target enterprise value of 122.1 billion yuan, corresponding to 45x. In addition, the net debt is 10.9 billion yuan, corresponding to the equity value of 111.2 billion, according to 51% of the consolidated table, the corresponding valuation is 56.7 billion yuan. Considering the dilution increase and the operating space of Shagang, the target price is 16 yuan.
Risk tips: slow progress of acquisition, GS revenue is not up to expectations, the main steel industry profits decline, fixed increase the uncertainty of the plan.
