Taijia Co., Ltd. announced on December 13, 2023, that the company plans to use RMB 120 million to acquire a total of 36.51% of the minority shareholders' shares in the subsidiary Platinum Electronics. If the acquisition is completed, the company's direct shareholding ratio in Platai Electronics will rise to 92.74%, and the company will indirectly hold 7.26% of Platai Electronics's shares through Changsha Huijin. The proposed acquisition highlights the company's high recognition of its subsidiaries and good expectations for the development of the power supply business. We expect the company's net profit for 2023/2024/2025 to be 162/280 million/352 million yuan, respectively, with a year-on-year difference of +24.5%/+72.1%/+26.0%, respectively, corresponding to PE of 39.2/22.9/18.2 times. Maintain a “hold” rating.

Yada focuses on the consumer electronics power supply business, and new energy is opening up a new path of growth. Yada, a subsidiary of Botai Electronics, has a long history of development and has a leading market position in the power supply industry. Based on its excellent quality performance, large-scale manufacturing capabilities, leading testing capabilities and large customer development and service capabilities, it continues to increase its market share in the consumer electronics power business based on major domestic and foreign customers, and focuses on expanding the new energy sector based on its original business, and is actively putting into production of new energy photovoltaics, charging piles, data centers and site energy power services. The company is in the initial investment period in the power supply sector. As of the end of the third quarter, the number of projects under construction increased by 173.09% compared to the end of the previous year. Mainly, continuous investment in the production line of fund-raising projects is due to the release of production capacity and the gradual delivery of ongoing orders. We expect the company's new power supply business to enter a performance release period starting in 2024.

The acquisition strengthens control and firmly promotes the development of the power supply business. In September 2022, the company achieved control over Platai Electronics and its subsidiary Yada Electronics through the Hairong Fund and Changsha Huijin, and merged Platinum Electronics. After the equity acquisition is completed, the company's direct shareholding ratio in Platai Electronics will increase from 56.23% to 92.74%, and achieve complete control over Platai Electronics by indirectly controlling 7.26% of its shares through Changsha Huijin. The company highly recognizes the intrinsic value of Platinum Electronics and continues to increase investment in the new power supply business. Currently, the company's downstream customers have good business growth expectations in the fields of mobile phones, photovoltaics, data centers, new energy vehicles, etc., and the company is expected to fully benefit from businesses such as high-power chargers, inverters, and fast charging modules as a power supply foundry.

Risk factors: Overseas business expansion falls short of expectations; market demand for bimetallic band saw blades falls short of expectations; revolutionary technology has emerged in the industry; product development and iterative upgrades have fallen short of expectations; power supply business development falls short of expectations; industry competition is intensifying.

Profit forecast, valuation and rating: The company is a leading domestic bimetallic band saw blade enterprise, with market share ranking first in China and the top three in the world. Starting in 2022, the “sawing and power supply” dual main business development model has been launched, and the expansion of the band saw blade and new energy power supply business has broad prospects for future growth. The proposed acquisition highlights the company's high recognition of its subsidiaries and good expectations for future power supply business development. We expect the company's net profit for 2023-2025 to be 162 million/280 million/352 million yuan respectively, a year-on-year difference of +24.5%/+72.1%/+26.0%, respectively, corresponding to PE of 39.2/22.9/18.2 times. Maintain a “hold” rating.