The company intends to acquire the business related to the global commercial vehicle afterprocessing injection system of Continental Group and enter the overseas market. The company will issue an announcement on the evening of March 1 (serial number: 2021-026). It is proposed to purchase not more than 19.1055 million euros (about RMB 149 million) and related parties (Chairman and General Manager Liu Yi, Chairman of the Supervisory Board Zhu Jie, Director and Deputy Chief Executive Zhu Qing) to purchase VT Faulquemont 100% equity and other commercial vehicle afterprocessing injection system related assets. This transaction is expected to enrich the company's product structure, improve the industrial layout, and continue to move forward to the company's strategic goals. We maintain the forecast of net profit of homing for 21-23 years at RMB 375 million and 548 million yuan, with a target price of RMB 114 and a target price of RMB 114 to maintain "buy".
The target company mainly deals with SCR urea pump and injection system, with a net operating interest rate of 18% in 2020. In this transaction, the company plans to purchase one equity (VT Faulquemont 100% equity), three fixed assets (part of fixed assets of Wuhu, Changchun and VT Emitec GmbH) and two intangible assets (part of IP), of Wuhu and VT GmbH, in which the equity purchase price does not exceed 18 million euros). The corresponding net operating profit for 2020 is 2.9x for Pplop E and 2.9x for Pax B. VT Faulquemont was founded in 2003, the main SCR urea pump and injection system, customers cover Europe / Asia / North America, etc., affected by the epidemic in 2020, the overall demand decline, superimposed restructuring and optimization, adjustment of business and personnel structure, revenue / net profit of 3429gamma 30,000 euros, excluding the impact of one-time factors, the net operating profit of 6.16 million euros, operating net profit of 18%.
The company's joint shareholding with core management demonstrates the long-term development confidence in the subject matter of the acquisition. In this transaction, assets in China (Wuhu assets, Changchun assets, Wuhu IP) will be purchased directly by the company. In terms of overseas equity and asset transactions, the company's co-founders (Chairman and General Manager Liu Yi, Chairman of the Supervisory Board Zhu Jie, Director and Deputy General Manager Zhu Qing) own 25.33% of HK SPV64.66% and 25.33% respectively through SPV. The remaining 10% are subscribed by outside investors or employees to; HK SPV or its subsidiaries to purchase 100% equity in VT Faulquemont (including repayment of intercompany loans), VTEmitec GmbH's assets and VT GmbH's IP. The core management of the company is deeply involved in this transaction, demonstrating its confidence in the long-term development of the acquisition target.
Maintain a "buy" rating with a target price of 114 yuan per share
As the motor vehicle national six emission standards enter the implementation period, the company's main products are expected to meet the volume and price rise. Regardless of the impact of this acquisition on the company's performance for the time being, we maintain a 21-23 net profit of 2.28 RMB 3.75 and 5.48 million, corresponding to an EPS of 2.85, 4.69 and 6.86 yuan. With reference to the comparable company's unanimous expectation of 36 times the average value of Wind E in 2021, taking into account the rapid growth of market capacity in tail gas post-treatment and the considerable growth of the company's net profit (64% CAGR in 2021-2023), a certain valuation premium is given to the company in 2021, maintaining the target price of 114x and maintaining the "buy" rating.
Risk hint: the risk that the progress of acquisition is lower than expected, the implementation of industry policy is lower than expected, and the progress of company's product certification is lower than expected.