Event

The company issued an announcement on December 26, and the China Securities Regulatory Commission reviewed the issue of Yinyi shares for the purchase of assets and related party transactions. According to the results of the meeting, the company issued shares to purchase assets and related transactions were unconditionally approved.

Core viewpoints

The company issued shares to acquire ARC Group of the United States, which was unconditionally approved by the Securities Regulatory Commission and became a model of real estate transformation of the manufacturing industry. The company plans to issue 48000 shares to Tibet Bank, at a price of 5.91 yuan per share to acquire the assets of the ARC Group of the United States. ARC Group is the world's second largest independent airbag gas generator manufacturer and the world's largest seller in the field of hybrid gas generators. ARC Group owns 121 patents and 10 registered trademarks. At the same time has a global production and sales network. The company has a huge space for development in the field of high-end automobile manufacturing in the future. The company will become the first Chinese A-share listed company to acquire overseas high-end manufacturing companies, and the approval of the CSRC is a milestone in the transformation of real estate companies.

The company has established a dual-main business model of "real estate + high-end manufacturing", and its profitability will be enhanced in the future. The company is the leader of Ningbo real estate, and the land reserve is mainly distributed in the Yangtze River Delta urban agglomeration. The company is actively expanding the layout of real estate, and the way of taking land is diversified and flexible. in addition to the form of recruitment and auction, it will also participate in court auctions, equity cooperation and other ways of taking land. The company recently announced that it intends to acquire a site in Yinzhou, Ningbo through the acquisition of shares in the project company, with a total construction area of 129,000 square meters, and the company will actually hold 67% of the shares of the project company. In terms of its foray into high-end manufacturing, the ARC Group acquired by the company is a leading manufacturer of key components of automotive safety systems. At present, the compound growth rate of national car ownership is 13% in three years, and the compound growth rate of output is 8%, while the self-sufficiency rate of domestic auto parts is relatively low. In the future, there is huge room for improvement in both the need for the replacement of airbag gas generators and the new demand.

Financial forecasts and investment suggestions

Since this major restructuring has not yet been settled, we only forecast the real estate business. Maintain the overweight rating of the company and maintain the target price of 11.50 yuan. We maintain the forecast of the company's earnings per share from 2016 to 2018 at 0.23,0.30,0.37 yuan respectively, and the comparable company's average valuation in 2016 is 50x. We give the company a valuation of 50x, corresponding to the target price of 11.50 yuan.

Risk hint

The settlement of the company's project is not as expected. Corporate income tax is higher than expected.