Events:
Feng-shaped shares released the 2016 annual report: during the reporting period, the company achieved operating income of 307 million yuan, down 26.42% from the same period last year, and realized net profit of 10.23 million yuan belonging to shareholders of listed companies, down 64.61% from the same period last year.
The company announced the audit report on the profit forecast of Wuxi majestic Seiko, which is the subject of the proposed acquisition. The actual number has been audited in 2016, and the net profit attributed to the shareholders of the parent company is 154 million yuan. At the same time, it is predicted that the net profit of shareholders belonging to the parent company will be 131 million yuan in 2017. the originally disclosed performance commitments for 2016 and 2017 are 115 million yuan / 125 million yuan respectively.
Main points of investment:
Terminal demand continues to shrink, and main business performance continues to decline. According to the 2016 annual report, the company achieved a net profit of 10.23 million yuan belonging to shareholders of listed companies, down 64.61% from the same period last year and 240% after deducting non-profit. Traditional industries increase the pressure of capacity removal, inventory removal and deleveraging, and the company's main business is affected by the shrinking end market and intensified competition, and the decline in product gross profit margin and product prices has increased, resulting in a continuous decline in performance.
The performance of Wuxi majestic Seiko, the target of the proposed acquisition, exceeded expectations. The audit report on the profit forecast of Wuxi Xiongwei Seiko, the target of the proposed acquisition, has been audited in 2016, realizing a net profit of 154 million yuan for shareholders belonging to the parent company. At the same time, it is predicted that the net profit of shareholders belonging to the parent company will be realized by 2017, which is higher than the performance commitment disclosed in the original non-public plan.
The application for fixed increase has been accepted by the Securities Regulatory Commission, and the company is not affected by the new refinancing rules for the time being. The company plans to issue no more than 32 million shares, with a base price of 34.03 yuan per share. The application for fixed increase has been accepted by the CSRC and will not be affected by the new refinancing regulations for the time being. at the same time, the company said that it will strive to complete the review of the CSRC by the end of March 2017 and the non-public offering by the end of the second quarter of 2017. Ensure that mergers and acquisitions are completed in 2017, achieve a grand merger, and seek greater development of the company in the future.
Earnings forecast and rating: maintaining the overweight rating is based on the principle of prudence. When the private placement is not finally completed, the dilution of equity and the impact on performance are not considered for the time being. It is estimated that the company's earnings per share in 2017, 2018, 2019 will be 0.06, 0.11, 0.13 yuan, respectively. If the additional offering is successfully completed, the company's earnings per share will be 1.37, 1.46, 1.57 yuan respectively in 2018. Corresponding to the current stock price PE is 28-26-24 times, the current performance of the main business is historically low, the company to promote the manufacturing-based diversification strategy layout is imperative to maintain the overweight rating.
Risk hint: the risk that the non-public offering can not be completed smoothly; the new business does not meet the performance promise.