The company acquired 100% stake in Tianjin Yongrong Tikang for 175 million yuan, and was acquired as one of the three major suppliers of Huawei data cables. after the acquisition, the company cut into Huawei's supply chain to maintain the "overweight" rating and maintain the target price of 27.30 yuan.
Main points of investment:
The company acquired Tianjin Rongtikang for 175 million yuan, cut into Huawei's supply chain, maintained the "overweight" rating, and maintained the target price of 27.30 yuan. The acquired target is engaged in the research, development, production and sales of communication cables, mainly producing MDF cables, DDF cables and data transmission cables for mobile communications, which have been widely used in Huawei technology, ZTE Corporation, FiberHome and other communication equipment manufacturers, with a revenue of 540 million yuan and a net profit of 24.85 million yuan up to the first three quarters of 2020, and thickened the company's performance behind the statement. The operating income from 2020 to 2022 was 15.58,30.25 and 4.525 billion yuan respectively, and the net profit attributed to the parent company was 1.06,1.58 and 342 million yuan, corresponding to EPS 0.61,0.91,1.97 yuan and 30 times PE in 2021.
On the basis of binding Gree, Midea and other major customers, the company continues to expand its production capacity, the company's revenue growth will exceed expectations in the future, and the application of automation equipment instead of labor can effectively reduce the company's product cost and increase the net interest rate. The company's IPO investment project will be completed by the end of 2020, and the annual sales revenue is expected to be 648 million yuan, accounting for 42% of the 2019 revenue.
The company's convertible bond project produces 300 million power connection components per year, and the sales revenue is expected to be about 1.1 billion yuan, accounting for 71% of the revenue in 2019. The increase in production capacity will increase the company's market share and revenue scale.
The company expands more large customers through horizontal mergers and acquisitions, and the integration of household appliance parts industry chain through vertical mergers and acquisitions will exceed market expectations. On the one hand, the company plans to buy a 100% stake in Tianjin Yongrong Tikang Communication Technology Co., Ltd by means of cash payment. The main products are MDF cable, DDF cable, coaxial cable, the products are mainly supplied to Huawei technology, ZTE Corporation, FiberHome and other customers. On the other hand, the company has established long-term cooperative relations with domestic and foreign well-known enterprises such as Midea, Gree Electric Appliances, Supor and Xinbao Electric Appliances, and has the opportunity to take advantage of key customers to expand more product lines through mergers and acquisitions to drive the growth of the company.
Catalyst: M & A landing, production capacity reaching production
Risk hint: M & An is lower than expected, and capacity expansion is lower than expected.
