Announcement: The company issued an announcement that it plans to increase the capital of its wholly-owned subsidiary Softcom Intelligence by no more than 2.8 billion yuan in cash. Softcom Intelligence will transfer 100% of Tongfang Computer's shares, Tongfang International's 100% shares, and Tongfang Chengdu Zhihui's 51% shares through public listing.
The purchase price may be in the range of 1,888 million yuan to 2.8 billion yuan. According to the acquisition announcement, the assets of the three companies to be sold have been publicly listed on the equity exchange. The listing price for this transaction is 1,889 billion yuan, and the maximum transaction price authorized by Softcom Power's shareholders' meeting is 2.8 billion yuan. In the end, Softcom Intelligence will determine the transaction price based on the delisting amount reached on the equity exchange.
There are three companies with assets to be acquired, with Tongfang Computer and Tongfang International as the core, with total revenue of 9.475 billion yuan in 2022.
According to the semi-annual report of Tongfang Co., Ltd., according to the semi-annual report of Tongfang Co., Ltd., Tongfang Computer mainly engages in Kunpeng/Shengteng servers and PC machines. In 2022, Tongfang Computer achieved revenue of 4.02 billion yuan, gross profit margin of 7.53%, net loss of 99 million yuan, 23H1 revenue of 1,631 million yuan, and net loss of 63 million yuan. Tongfang International is mainly engaged in consumer electronics business (private brand machinery revolution) and ODM business (PC foundry). In 2022, it achieved revenue of 5.455 billion yuan, gross profit margin of 7.22%, and net loss of 104 million yuan. 23H1 achieved revenue of 3,574 million yuan and net profit of 28 million yuan.
Acquire Huayuan's basic hardware to create a server+Euler OS+Gauss database full-stack solution. According to an announcement from Tongfang Co., Ltd., Shengteng Server has successively launched artificial intelligence supercomputing center projects in Beijing, Tianjin and other places. We believe that if this acquisition is successful, it can achieve collaborative sales with the company's existing Euler OS and Gauss database products and strengthen the company's overall competitiveness. After integrating server hardware+software, the profit level is also expected to increase further.
Hongmeng OS+ Tongfang PC, facing the sea of innovation and innovation. The main businesses of Tongfang International, which the company plans to acquire, are consumer electronics business (own brand PC) and ODM business (PC OEM). According to Softcom Power's official account, in April 2023, the company took the lead in adapting the open source Hongmeng system to x86 hardware. We believe this acquisition is expected to accelerate the company's Hongmeng OS and PC software and hardware adaptation business and create its own PC+Hongmeng OS national production products. The company's innovative customers and channel resources will also be further complemented, adding the company's superior IT technology service capabilities to complete a closed loop of product+sales+service. It is expected to become a bright new star in the innovation market in the future.
Profit forecast and valuation: We maintain our profit forecast. We expect to achieve revenue of 220.3, 255.3, and 29.76 billion yuan in 23-25, and net profit of 10.46, 12.69, and 1,538 billion yuan. The corresponding PE is 31x, 26x, and 21x respectively, maintaining the “buy” rating.
Risk warning: There is still a risk that this transaction will be suspended, suspended, or cancelled, including but not limited to, not being reviewed by the shareholders' meetings of both parties, not listed on property exchanges, unable to pass centralized review by operators, or obtaining overseas investment records.