Investment advice: Considering that plans such as share acquisition and convertible bond issuance have not yet been implemented, we expect the company's net profit to mother for 2024-2026 to be 11.6/13.1/1.48 billion yuan. The PE corresponding to the current stock price is 11/10/9X, respectively, giving it an “increase in holdings” rating.
Incident: ① Dingshuninvestment plans to acquire KPGlobal for US$151 million: CTB International plans to pay a special cash dividend of US$151 million to shareholders: ② KPGlobal plans to redeem the convertible bonds previously issued to Gaoling with US$65 million: ③ TEP plans to issue a new HK$500 million, six-year convertible bond with an annual interest rate of 3.5%. In addition, Gao will reserve the right to purchase 20% of KPGlobal's shares for $65 million over the next five years: ④ KP plans to issue US$154 million to TEP ( The amount is equivalent to KP's payment to XP International after the transaction). It is an eight-year convertible bond with an annual interest rate of 3.5%. TEP International has the right to convert this bond to 30% of KP Global's shares within the next eight years.
After the implementation of the plan, the profits of listed companies are expected to increase in 2024, and at the same time, they will have the opportunity to enjoy the benefits of KP listing in the future. We believe that the benefits of this transaction are: ① We expect KP losses in 2024 to be basically the same as 2022/23 (about 200 million yuan). Considering that the full implementation of the above plan is expected in August, the impact of KP losses on listed companies' profits in 2024 will be reduced by about 100 million yuan. ② After the divestment of KP, the business structure of listed companies will be more clear, the brand matrices will be dominated by running, and the synergy effect will be more obvious. ③ The cash flow generated by the main brand can support the future development of Saucone and Mille, and the two will be more well-funded in the future: ④ If KP is listed in the future, the listed company will still have the right to hold 30% of the shares and can enjoy the benefits of listing. 5. Shareholders of listed companies will receive a dividend of HK$0.447 per share, with a dividend rate of approximately 8% corresponding to the 5/9 closing price.
The sales volume of the main brand in April was in line with expectations, and we expect professional sports brands to further unleash their growth potential.
1) Main brand: Abnormal weather in the south affected sales in late April, and sales performance in the north was better than expected, so overall, recent sales are in line with expectations: Currently, the main brand is 25% off, improving month-on-month: inventory sales are close to 4 months. 2) Professional sports brands: We expect that the cash flow generated by the main brand after the divestment can be invested in Saucone and Mille, and it is expected that the two will develop faster than expected in the future.
Risk warning: share acquisitions fall short of expectations, KP operations fall short of expectations, etc.