Events. The company recently announced that it intends to acquire IACGSA's ST&A (soft accessories and acoustic originals) business-related assets in cash. The specific way of transaction is as follows: IACGSA injects the relevant assets of ST&An into the newly established company B1, and Shenda shares subscribe for 70% of the shares of B1 through Shenda UK. The assets injected into B1 include equity and soft accessories of many companies such as the United States, Poland, South Africa and China, as well as assets related to the business of acoustic components. The consideration of this transaction is related to working capital and interest-bearing liabilities on the delivery date and needs to be confirmed after delivery. Among them, the enterprise value of ST&An is determined to be 570 million US dollars, the estimated EV/EBITDA (16E) is about 4.55 times, and the estimated transaction consideration is 308 million US dollars.

IAC is the world's leading supplier of automotive interior parts. Founded in 1988, IAC Group has developed into the world's third largest supplier of automotive interior parts and the only global supplier specializing in interiors. ST&A business is a strong segment of IAC Group, with a history of more than 100 years, providing automotive soft accessories and acoustic components to GM, BMW, Daimler, Ford and other major OEM manufacturers in the global automotive industry. The company's 2014-2016Q3 unaudited revenue was $11.37,11.41 and $877 million, respectively, and EBITDA was $8078, $9998 and $94.44 million, respectively. The Roland Berger report estimates that the global ST&A business market was about $10.23 billion in 2015, with a compound annual growth rate of about 2.6 per cent from 2012 to 2015. Among them, Autoneum, IAC and HPPelzer account for 20%, 11% and 10% of the total ST&A market respectively, making them the three giants of the global ST&A market.

The company has taken an important step towards the development of automobile interior decoration business with high added value. As a multi-business comprehensive large enterprise, the company has actively developed the automobile interior decoration business with high added value in recent years. The automobile interior decoration business CAGR reached 20% from 2011 to 2015. At present, the company has developed into the largest carpet supplier in China. The acquisition of IACST&A business is in line with the direction of the company's strategic transformation and upgrading. IAC, as the global market leader in automotive soft accessories and acoustic components, is expected to take the lead with the development of lightweight and electric vehicles and higher requirements for interior parts, relying on the global layout and competitive advantages in many fields. At the same time, the integration of IAC can effectively strengthen the advantages of the company's automotive interior business, enhance international influence, significantly thicken the business, and have positive development significance.

Under the background of further promoting the reform of state-owned enterprises, the company is expected to take the lead in the reform. Shenda Group, the controlling shareholder of the company, holds 31.07% of the shares in the company, and the actual control of the company is the Shanghai State-owned assets Supervision and Administration Commission. In the first quarterly report of 2016, Shenda Group made it clear that in response to the call for the reform of state-owned enterprises, the company is studying the listing of the overall or core business of the textile group, and listing its textile products, foreign trade and other related businesses. In line with the principle that it is conducive to the development of listed companies and the interests of all shareholders, it plans to gradually inject into listed companies holding or indirect holding, some of the unlisted foreign trade business assets that meet the conditions within five years.

Do not consider the increase in the performance of IAC acquisitions for the time being. It is estimated that the net profits attributed to the parent company from 2016 to 2018 are 2.28,2.56 and 307 million yuan respectively, an increase of 34.54%, 12.12% and 19.56% over the same period last year, and the corresponding EPS is 0.32,0.36 and 0.43 yuan per share respectively. The comparable company's 17-year PE is between 20x-43X. Considering the high growth of the company's auto interior business, the company is given a 2017 40XPE corresponding to the target price of 14.4 yuan.