Event: the company announced that the listed company intends to buy 99.76% of the shares of Yaxun Network by issuing shares and paying cash, and intends to buy 100% stake in Baifei Electronics by issuing shares. In addition, the company launched the second phase of the equity incentive plan, the number of shares to be awarded accounted for about 5.89% of the total share capital of the company on the announcement date of the draft incentive plan, and proposed to change its name to CLP Digital Technology Co., Ltd.

The launch of the largest equity incentive plan in the company's history heralds a profound qualitative change. This incentive plan intends to grant 25.123376 million stock options to the incentive object, and the corresponding number of underlying shares is 25.123376 million shares, accounting for about 5.89% of the total share capital of the company on the date of announcement of the draft incentive plan, far exceeding the proportion of 2.28% of the total share capital of the first equity incentive plan. The number of incentive targets of this incentive plan is 315 (excluding reserved option incentive objects), which is also far higher than the 138 people of the first equity incentive plan. The company launched the largest equity incentive plan in history, heralding the official start of a profound qualitative change.

Yaxun Network is one of the leading domestic vehicle networking enterprises and the mainstream supplier of major commercial vehicle factories and construction machinery factories in China. The main business of Yaxun Network is the research and development, production and sales of vehicle networking terminals, system platforms and related services. Closely focus on five major product lines: general-purpose network connection terminal (main products are: travel recorder, T-box), human-computer interaction network connection terminal (main products: IVI, smart screen, etc.), collaborative control network connection terminal (main products are: four directions, edge computing unit, etc.), automobile information security (main product is security gateway, etc.) and big data platform system And develop in combination with Beidou navigation depth. According to the nature of customers, Yaxun network car networking business can be divided into two categories: front-loading market and rear-loading market. In 2020, Yaxun's network revenue mainly comes from the pre-installation market, and its customers are mainly commercial vehicle factories and construction machinery manufacturers. Yaxun Network designs products that meet its requirements according to the needs of the whole vehicle factory and its vehicle model specifications, and achieves customized research and development of different models, production line installation and whole vehicle departure from the factory. It is the mainstream supplier of Dongfeng Automobile, BAIC Futian, Sinotruk, Jianghuai Automobile, Shaanxi heavy truck, FAW Jiefang, Yutong bus, Jinlong Automobile, Caterpillar Inc, Zoomlion Heavy Industry Science and Technology and other major domestic commercial vehicle factories and industrial machinery factories.

Baifei Electronics is a domestic information processing platform supplier with high performance and high reliability, such as shipborne, spaceborne, large aircraft, nuclear industry and so on. The main business of Baifei Electronics is a variety of dedicated parallel computing, signal and data processing, embedded software product design, research and development and sales, product types are mainly all kinds of embedded card modules and blade servers, with a small number of computing equipment system integration, while providing related technical services, is a supplier of embedded dedicated computer digital modules. Baifei Electronics focuses on providing high-performance domestic computer platform, information processing platform and other overall solutions and professional services for high-end special electronic equipment. Baifei electronic customers are mainly aviation, aerospace, shipbuilding, electronics, power, rail transit and other industries overall units and head enterprises, its domestic design capability has been extended from board design to chip design and basic software design. It has more than 100 related product families based on embedded software and hardware, including nearly 60 based on Godson processors, 30 based on Feiteng processors and 10 based on Shenwei processors.

The proposed acquisition of two high-quality assets will greatly enhance the performance of listed companies and help support the company's ability to provide "cloud-edge-to-end" integrated digital solutions. The annual income of Yaxun Network from 2019 to 2020 is 1.404 billion yuan and 1.621 billion yuan respectively, and the net profit is 86.4209 million yuan and 71.0823 million yuan respectively. From 2019 to 2020, the net profit of Baifei Electronics is 460 million yuan and 1.43 billion yuan respectively, and the net profit is 149 million yuan and 127 million yuan respectively. Through this acquisition, it is expected to greatly enhance the performance of listed companies and improve their profitability. Yaxun Network has been committed to providing customers with vehicle networking products and solutions for many years, and has been widely used in domestic commercial vehicle manufacturers and key industries in the field of vehicle supervision. After the integration, Yaxun Network will face the trend of the new four modernizations (intelligence, electrification, networking and sharing) in the automotive industry, combined with the company's advantages in the transportation industry and passenger car customer market. carry on the transportation "omni-directional, all-way, all-weather"

Management, form a digital transportation system constructed by "end-network-cloud", realize the intelligent coverage of the whole process of transportation management, and enhance the comprehensive ability of the company to provide digital solutions in the transportation industry. Baifei Electronics is engaged in the key software and hardware business of embedded systems, and its main products include embedded computers, high-performance signal processing, high-speed network switching, data recording storage and information processing modules. Baifei electronic products have the product characteristics of high integration of software and hardware and product attributes such as strong real-time, high reliability and high security, which can enhance the strong real-time computing capability in the field of financial technology and industrial Internet, and use localization technology to effectively ensure the security of information infrastructure on the key nodes of the system, and enhance the company's key technical capabilities in providing industry digital solutions.

Investment advice: the company recently issued three important announcements: the acquisition of Yaxun Network and Baifei Electronics, the launch of the largest equity incentive in the company's history, and the proposed renaming to China Electric Power Digital Technology Co., Ltd., the company has two top "national team" strategic shareholders of China Electric Power Group and China Arms equipment Group, and is located in the rare listed company platform of Shanghai, the world science and technology innovation center. No matter the major shareholders' new vision for the positioning of the company's asset securitization platform or the asset quality of the main business, as well as focusing on the digital transformation and development of the industry, are undergoing profound "qualitative changes" by leaps and bounds, and we are firmly optimistic about the company's broad development prospects. considering that the audit and evaluation of the underlying assets of this reorganization has not yet been completed, the estimated valuation and proposed pricing of the underlying assets have not yet been determined, out of the principle of prudence. Without considering the thickening of the asset performance of the proposed acquisition for the time being, the company's EPS is expected to be 0.89 yuan and 0.94 yuan respectively from 2020 to 2021, maintaining the buy-A rating.

Risk hint: the progress of restructuring is not as expected, the integration of mergers and acquisitions is not as expected, and the expansion of emerging business is not as expected.