Incident: **** Mouse Electric announced that the company plans to acquire 61.8% of Guangdong Roman Intelligent Technology Co., Ltd.'s shares with 0.15 billion yuan in cash. After the transaction is completed, the company will have a controlling position in Roman Intelligence, and Roman Intelligence will be included in the scope of the consolidated statement. The controlling interest transferor of Roman Intelligence promised that the net profit attributable to shareholders of the parent company in 2024/2025/2026 (whichever is lower after deducting non-recurring profit and loss) will not be less than 15 million/25 million/40 million yuan.
Roman Intelligence is an expert in the field of small personal care appliances: Roman Intelligence has been deeply involved in the small personal care appliance industry for many years. Its main products include electric toothbrushes, high-speed hair dryers, hair straighteners, and electric shavers. Roman Intelligence's sales model is mainly ODM/OEM foundry business, and the manufacturing business accounted for 80% of revenue in the 2023s. Roman Intelligence has a R&D team of more than 120 people, and has strong iterative ability to develop new products; it has an efficient product production supply chain system, and the key core component, the high-speed brushless motor, has achieved self-development and self-production. With a complete R&D, production and sales system, Roman Intelligence has been recognized by customers in Japan, Europe, the United States, South America, the Middle East, etc. Customers include well-known brands such as Philips in the Netherlands, Panasonic of Japan, Yamoto of Japan, and Cyber of France.
This acquisition will help **** expand small personal care appliances and overseas business: **** and Roman Intelligence are in the same small household appliance industry and have synergy effects in raw material procurement, manufacturing, and sales channels. In 2023, ****'s other small household appliances (including personal care, mother and baby, and kitchen utensils) business accounted for less than 15% of revenue, and there is plenty of room for improvement. After acquiring Roman Smart, **** will complete its product line in the fields of electric toothbrushes and high-speed hair dryers, expand the category of small personal care appliances, and increase its share in the small personal care appliances market. On the other hand, **** will use Roman Intelligence's high-quality customers to expand overseas markets and promote the implementation of a global strategy.
Investment advice: Little Bear is a leading online small home appliance company in the industry, and has a leading share in many long-tail small home appliance markets. **** has the ability to quickly capture market demand and is actively developing products to enhance its brand power. In the future, with the gradual recovery of demand in the domestic small household appliances industry, the company's profitability will improve. The company's EPS for 2024 to 2026 is expected to be 3.14/3.50/3.92 yuan, respectively, maintaining a buy-A investment rating, giving it a price-earnings ratio of 18 times in 2024, which is equivalent to a six-month target price of 56.51 yuan.
Risk warning: Prices of raw materials have risen, and competition in the industry has intensified.