Core ideas:
Acquire Changshu Asia, enter the field of military industry. Guangli Science and Technology announced on January 5, 2017 that it plans to buy 100% equity in Changshu Yabang for 176 million yuan, including 151 million yuan (20.01 yuan per share and 7.51 million shares) and 25 million yuan in cash. At the same time, 40 million yuan of matching funds will be raised for cash consideration and related taxes and fees.
Changshu Yabang: Zhouqiao electric control system supplier. Changshu Yabang is currently the main supplier of domestic military engineering equipment (pontoon bridge) electric control system and training simulator. it has passed the military design and stereotyped type 4 water and land pontoon bridge electric control system and type 2 pontoon bridge training simulator. has obtained "weapons and equipment quality management system certification", "three-level secrecy qualification unit certificate", "equipment contractor registration certificate".
The integration of the army and the people has been continuously promoted, and the relevant policies are beneficial to the enterprises participating in the army. In March 2015, General Secretary Xi Jinping proposed for the first time to "raise the development of civil-military integration into a national strategy." the meeting of the political Bureau of the CPC Central Committee held in March 2016 formally raised the development of civil-military integration into a national strategy. In July, the CPC Central Committee, the State Council, and the Central military Commission triggered the "opinions on the Integrated Development of International Construction and National Defense Construction".
The profits of listed companies will be improved. Affected by the continued downturn in the coal industry, the performance of listed companies has declined in the past two years. Changshu Asia's committed performance from 2016 to 2018 is 11.5 million yuan, 15 million yuan and 17.75 million yuan respectively. Through this asset acquisition, the operating conditions of listed companies are expected to be further improved and enter the military industry with good prospects.
Profit forecast and investment advice: excluding this non-public offering, we expect the company's EPS in 2016-18 to be 0.140.17prime 0.18 yuan. Considering the good development prospects of Changshu Asia in the field of military industry, it covered it for the first time and gave the company a "cautious overweight" rating.
Risk tips: the progress of non-public offerings is not up to expectations, the performance of Changshu Asia is not up to expectations, and the prosperity of the coal industry continues to decline.