Introduction to this report:
The company plans to acquire 62.95% of Shanghai Dachuang's shares in cash. This transaction can quickly complete the company's NEV thermal management waterway valve product line, increase the bicycle value of the company's products, and enhance the competitiveness of the auto zero business.
Key points of investment:
Investment advice: Maintain profit forecasts and maintain an “gain” rating. Since the acquisition has yet to be implemented, we maintain the company's 24-26 profit forecast. The company's net profit for 24-26 is estimated to be 0.936/1.12/1.301 billion yuan, and the corresponding EPS is 0.88 yuan, 1.05 yuan, and 1.22 yuan, respectively, +27%/20%/16% compared with the same period last year.
Incident: The company plans to acquire 62.95% of the shares of Shanghai Dachuang Automobile Technology Co., Ltd. in cash at a transaction price of 0.215 billion yuan and increase the capital of Shanghai Dachuang by 30 million yuan. After the transaction was completed, the listed company held 65.95% of Shanghai Dachuang's shares. Referring to Shanghai Dachuang's 2023 results (revenue 0.091 billion yuan, performance -0.012 billion yuan), the transaction is valued at 3.7 x PS; reference is 2024 Q1 net assets of 59.45 million yuan, 5.7 xPb.
Enrich the existing auto parts product line and strengthen customer binding. Shanghai Dachuang is mainly engaged in automotive OBD intelligent electronic control products, involving the two major fields of thermal management and fuel emission components for new energy vehicles. This transaction can quickly complete the company's NEV thermal management waterway valve product line, enhance the bicycle value of the company's products, and help the company expand the energy-saving vehicle parts circuit. Furthermore, on the customer side, Shanghai Dachuang has become a parts supplier for automakers such as Great Wall, Changan, Cyrus, SAIC Chase, Geely, Ideal, Yutong, and Sinotruk. As product coverage and component supply capacity increase, it is expected to strengthen the company's deeper ties with existing customers.
The performance promise is relatively optimistic, and it is expected to significantly increase the company's performance after implementation. In 2024-2026, the cumulative revenue of Shanghai Dachuang should not be less than 0.91 billion yuan during the performance commitment period, and the cumulative net profit should not be less than 71 million yuan. The average annual revenue requirement is +233% compared to Shanghai Dachuang's revenue in 2023, and the acquisition company is expected to have plenty of on-hand orders. Also, look at the profit performance required by performance promises. The average net interest rate level reached 7.8%, which is relatively consistent with the company's 23H2 auto zero business and the 24Q1 profit level of Yinlun Co., Ltd. in the same industry, and the requirements for startups are relatively high.
Risk warning: Failure to implement acquisition transactions and increased competition in the NEV industry led to lower profit margins for transmission parts companies