Nanochip plans to acquire 79.3% of Shanghai McGowen's shares, and the magnetic sensor business continues to expand
Nanochip announced that it plans to acquire 79.31% of Shanghai McGowan's shares in cash, with a total purchase consideration of 793 million yuan. McGowan's main products include magnetic switch position chips, magnetic current chips, magnetic coding chips, magnetic sensors and related modules. Applications include consumer electronics, industry, and new energy vehicles. McGowan has 23 million yuan in revenue and promised 24-year profit of 39 million yuan. The company's valuation is 1 billion yuan, corresponding to 25.6 times P/E in 2024. This acquisition will help Nanochip expand its product matrix and integrate suppliers, customers, and R&D resources to enhance competitiveness. We expect the company's 24-26 revenue to be 18.5/24.5/3.13 billion yuan. We are optimistic that the company will have an advantage in product layout, resource integration, etc., giving 11 times the 24-year PS (10.2 times the industry average), and maintaining the purchase price. The target price is 142.78 yuan.
McGowan specializes in sensor chips. The application areas include consumer electronics, industrial, and new energy vehicles. McGown's core team comes from leading sensor and semiconductor companies such as Honeywell (Honeywell), MaxLinear (MaxLinear), and Marvell (Marvell). The main products include magnetic switch position detection chips, magnetic coding chips, magnetic sensors and related modules. The products are widely used in consumer electronics (mobile phone terminals, drones, sweepers, two-wheeled electric vehicles, etc.), industry (robotics, industrial control, etc.) Security, etc.), new energy vehicles (three electric vehicles, chassis, BMS, etc.) fields. McGowan has established a leading market share advantage in segments such as magnetic coding and magnetic switches.
McGowan's 2022/2023 revenue was 27/30 million yuan, and net profit to mother was 0.29/019 million yuan. The transferor promised that McGowan's net profit target for 2024/25/26 was 3912/5,154/75.68 million yuan.
Enrich magnetic sensor products such as magnetic coding and magnetic switches. We believe that this acquisition is beneficial to 1) business integration: According to Mordor Intelligence's estimates, the global magnetic sensor market will exceed 5.1 billion US dollars in 2029. McGone Business Collaboration Company's current magnetic sensor business layout, Nanocell will become one of the few domestic companies with multiple types of magnetic sensor products and business layouts such as position, speed, switch, and current; 2) R&D resource integration. Give full play to the technical advantages of both parties and improve the company's magnetic sensing IP technology accumulation; 3) Customer base integration. McGowan has accumulated a broad customer base in the downstream field of magnetic sensing, especially in the automotive electronics field. It complements the company's existing signal chain and power management chip products, and the company's automotive business product coverage and market share are expected to continue to increase; 4) Supply chain integration can enhance the company's bargaining power with suppliers and overall profitability.
Maintain the buy rating, target price is $142.78
Without including McGowan's merger in the profit forecast, demand is gradually recovering. We adjusted the company's 24-25 revenue to 18.5/2.45 billion yuan (previous value: 17.4/2.26 billion yuan). Considering the decline in gross margin and the impact of rising personnel expansion costs, the net profit was reduced to -1.85 billion yuan (previous value 0.1/270 million yuan). The company's short-term profit is under pressure. We are optimistic that the company will play an advantage in product layout and resource integration, giving 11 times 24 times PS (10.2 times the industry average) to maintain the purchase and target price 142.78 yuan.
Risk warning: The recovery in downstream prosperity fell short of expectations, and the competitive landscape of the industry intensified.