The acquisition of Boris Seth will become the largest shareholder of the company.
The company announced on the evening of September 26, 2016 that it intends to issue shares and pay cash to buy assets and raise matching funds. The company intends to buy 100% equity of Burrows at a price of 958 million yuan, of which 40% (383.2 million yuan) of the transaction consideration is paid in cash, and the remaining 60% equity (574.8 million yuan) is obtained by issuing shares with the approval of the CSRC. In addition, the company plans to issue shares to no more than 10 specific investors to raise supporting funds, with a total amount of no more than 260 million yuan, which is intended to pay part of the cash consideration, the fees of relevant intermediary agencies and the construction project of Bursese mobile marketing integrated service platform. The asset price for issuing shares is 6.81 yuan per share, and the reserve price for raising matching funds is 6.81 yuan per share. Cash payment shall not be based on the successful implementation of the issuance of shares to purchase assets. After the acquisition of 40% stake in the target company, the company will become the largest shareholder in Boris Seth, and will form effective control over the target company.
The valuation of the acquisition target is reasonable, the profitability is strong, and the performance thickening effect will be highlighted next year.
Boris Seth is an excellent provider of mobile digital marketing solutions in the industry, with a gross profit margin of 65% in the first half of 2016. The original shareholder promised that the net profit of Bursace from 2016 to 2018 would reach 6700plus 8710 / 113.3 million yuan. According to the consideration of 958 million yuan, the purchase price is equivalent to 16-year PE14.3X, the valuation is more reasonable. We select 6 listed companies (Mingjia Technology, Leo shares, Blue cursor, Tencent shares, Huayi Jiaxin, Provincial Guang shares) that account for a large proportion of the main business income, and their 16-year overall price-to-earnings ratio is 34.38X. We expect the target company to achieve consolidation in the last quarter of this year. Assuming that the revenue is not obviously seasonal, the target company is expected to bring a net profit of 6.7 million yuan to the company. In 2017, assuming that the target company fulfills its promised net profit, the performance increase brought about by cash acquisition will reach 34.84 million yuan. If the share issue is approved, it will bring additional profit contribution.
The synergistic effect is obvious in the optimal matching of resources and demand.
After the completion of this transaction, the listed company and the target company can share customer resources and business information, and the company can link to many high-quality advertising media resources through Boris Seth. To achieve the boss company customer mobile advertising needs and these high-quality advertising resources docking, to provide customers with more comprehensive services Further promote the implementation of the company's platform layout of "ecological landscape + green environmental protection + intelligent people's livelihood". The company mainly focuses on real estate gardens and has accumulated many high-quality real estate developers and other customer resources. The advertising of real estate developers has gradually changed from traditional media to mobile new media, and the company's customer resources will bring Burrows' new customer network.
Deep Blue Environmental Protection thickening performance is obvious, Maple Cai ecological investment income has shrunk significantly, maintaining the "buy" rating.
Deep Blue Environmental Protection promised a net profit of 4640 USD 6728 / 90.82 million in 2016-18. As Deep Blue Environmental Protection enters the financing platform of listed companies, we believe that the environmental protection business is more likely to fulfill its net profit commitment in the future. As the acquisition of Maple Color Ecology by Sante Cableway has been temporarily suspended, the company's investment income will be greatly reduced, which is quite different from what we had expected. So we lowered our profit forecast, and we forecast the company's 2016-18 EPS0.13/0.21/0.25 yuan (after dilution), YoY+21%/56%/20%,CAGR36%. During the suspension period (April 28-September 26), the industry (Shenwan Landscape Engineering) increased by 20.92%, and there was a certain demand for the resumption of trading. Consider valuing the business divisions of garden, environmental protection and mobile digital marketing, corresponding to a reasonable valuation range of 8-9 yuan, and maintaining a "buy" rating.
Risk hint: the real estate business is in the doldrums and Boris failed to fulfill its promised net profit.