Event: the company issued an announcement: it is proposed to set up a wholly-owned subsidiary of Tianqi Model North America to acquire all assets and businesses of DieTech (North American Mould Technology Co., Ltd.) at a total price of no more than US $33 million.
Comments:
Layout the North American market, further develop and serve overseas high-quality customers
1) the target company Die Tech is mainly engaged in automotive metal stamping dies, and its customers are mainstream American automobile companies such as GM, Ford and Chrysler, and it is a strategic supplier to GM. This acquisition will help the company to strengthen its localization services with the help of Die Tech, further expand the North American market and achieve rapid growth in overseas business. 2) according to the highest purchase price, the static pe is 13 times (the net profit in 2016 is 17.29 million yuan), so the valuation is reasonable. If the acquisition goes well, it is expected to thicken the company's performance this year and next.
The main mold industry has sufficient orders, and the German subsidiary is expected to improve in the future.
1) in 2016, the company's new orders reached 1.351 billion yuan, a record high. Thanks to the mainstream car companies speeding up the development of new models (including new energy vehicles) to seize the market in the fierce competition, the company still has plenty of orders on hand, which will support good growth this year and next year. 2) it suffered a loss due to the problem of running-in with its German subsidiary in the previous period (a loss of 12.99 million yuan in 2016). As the problems gradually disappear, the operations of German subsidiaries will improve, and we expect to significantly reduce losses this year.
The growth and extension of the main business in the medium and long term are worth looking forward to.
1) the company leads the world in the scale of automobile panel die business, the customer structure is of high quality, and the product quality is recognized by the mainstream vehicle manufacturers at home and abroad. With the transfer of the major automobile mold industry in Europe and the United States to China and other low-cost countries and the layout of the company's overseas markets, the domestic and foreign sales of the company's panel mold business is still expected to grow rapidly, and the market share is expected to increase gradually. 2) the company will continue to actively seek cooperation projects and explore diversified strategic layout around aerospace, military, new energy, intelligent manufacturing, high-end equipment manufacturing and other high-tech fields and emerging industries. This will help to disperse the company's operational risks and seek new growth points for long-term development in the future.
Profit forecast, maintain "overweight" rating
To sum up, we expect the company's EPS in 2017-19 to be 0.230.31 plus 0.38 yuan per share, corresponding to 26 times the 2017 PE, maintaining the "overweight" rating. The automobile industry is the target of weak cycle, with sufficient on-hand orders and supporting performance growth. at the same time, the strategic layout of diversification is expected to be strong, so it is recommended to pay continuous attention to it.
Risk hints: domestic and export mold business growth is lower than expected; cost growth during the period is higher than expected; convertible bond project production progress is lower than expected; acquisition progress and integration are lower than expected; exchange rate risk.