Event: the company announced the completion of the implementation of the reduction of directors and senior executives on February 24, the progress of investing in Ayesi on February 10, and the non-public offering on January 25 was approved by the Development and Review Committee of the Securities Regulatory Commission.
With the approval of non-public offerings, capital strength is expected to be enriched. The total amount of funds to be raised in this non-public offering will not exceed 573 million yuan, which will be mainly invested in health appliance industrialization projects, safety and intelligent engineering equipment purchase projects and supplementary current funds, with the raised funds of 280 million yuan, 140 million yuan and 153 million yuan respectively. Through the construction of health appliances project, the company plans to put into production air purifiers, cold and warm fans, humidifiers and other products, which can optimize the product structure, grasp the market opportunities in the field of health appliances, and open up new business growth points. The purchase project of safety and intelligent engineering equipment will help the company to ensure the quality of the project and improve its comprehensive competitiveness.
Participate in Eise, outward layout of new profit growth points. Huzhou Jinqian, which participated in the company, partnered with Yuanda Investment and Yuntu Holdings to set up a partnership, jointly investing 100 million yuan in Yixi (China) Environmental Protection Technology Co., Ltd. Huzhou Jinqian plans to increase its capital through itself or the enterprises in which it participates. Huzhou Jinqian contributed 35 million yuan, accounting for 35% of the partnership. The target company Aisi is the provider of air purification and gas filtration solutions, and the filter material is the core product of Ayesi. It has excellent product performance and rich production technology reserve, and can achieve large-scale mass production after the production line is put into production in the future. Ayesi promises that the net non-tax profit from 2021 to 2023 will not be less than 60 million yuan, 80 million yuan and 100 million yuan, respectively. If the above operating targets are achieved, the company has the right to acquire 51 per cent of the underlying company according to 9 to 12 times PE. If the above can be achieved at present, the company's business diversification may make significant progress.
Construct and deepen the two-wheel drive mode of "small household appliances + engineering construction". After introducing Guohai Construction in 2019, the company began to explore the mode of "small household appliances + project construction", which realized both domestic and foreign lines of the company's business, which helped to stabilize the seasonal fluctuation of performance, open up new profit growth points, realize business diversification, and enhance the company's sustainable profitability and risk resistance. Guohai Construction promised to achieve net profits of 20 million yuan, 30 million yuan and 50 million yuan respectively from 2020 to 2022. With a total net profit of 100 million yuan in three years, we expect the 2020 performance commitment to be within reasonable expectations. Although the performance of the company's small household appliances sector in 2020 was affected by the overseas epidemic, the company's overseas sales of small household appliances returned to the level before the epidemic in the third quarter of 2020, an increase of 13.5218 million yuan, or 9.45%, compared with the same period last year. The small household appliances sector may be affected by the rapid rise in exchange rates and raw materials in the future, so there is no need to worry too much about the stability of the small household appliances business in the long run.
Investment advice: carefully recommend ratings. The company's production and sales in the third quarter has rebounded compared with the same period last year, the company raised funds through non-public offerings, and layout of new business, engineering business volume, directors, executives to reduce the implementation of the completion. It is estimated that the company's EPS in 2020 and 2021 will be 0.17 yuan and 0.27 yuan respectively, corresponding to 96 times and 60 times PE respectively, which will be upgraded to "cautious recommendation" rating.
Risk tips: raw material price fluctuations; exchange rate fluctuations; investment benefits are not as expected.
