Event: on December 6, 2017, the company announced the purchase of 100% equity interest in Dajin heavy Industry with 780 million yuan in cash. Liu Nan, the company's controller and chairman, will increase the shares of the company within 12 months after the completion of the 100% equity transaction. The total amount is not less than 100 million yuan.
Acquire Dajin heavy Industry and improve the closed-loop Industry chain of ship equipment "from Design to Construction"
Dajin heavy Industry is the general assembly base of all kinds of general contracting ships of listed companies, and the manufacturing base of military auxiliary ships, military trade ships and heavy equipment, focusing on the construction of "two high and one low" ship products: the main three main lines of LNG power ships, special engineering ships / marine engineering platforms, official and military auxiliary series ships.
1) military market: Dajin heavy Industry has the second-level secrecy qualification, and is actively promoting the certification and application of GJB quality system and weapons and equipment research and development, and will play a synergistic role with listed companies and Jinhai in the future to expand the army boat equipment market, and is expected to cut into the field of military auxiliary ship equipment.
2) overseas markets: Dajin heavy Industries attaches great importance to the development and docking of the international market, and the foreign naval survey ship project has passed its military design review and entered the implementation stage; and set up Russia and the far East market development team to develop and customize a series of chemical tankers suitable for the Russian market, which has become the main supporting point for the enterprise's future operation.
According to the performance commitment, the net profit of Dajin heavy Industry from 2018 to 2022 is 70 million yuan, 93.3 million yuan, 119.56 million yuan, 121.04 million yuan and 123.43 million yuan respectively.
Jin Shipping: sea and air equipment is scarce, and the performance is expected to continue to start high growth as the army changes to land.
Gold Shipping military Industry has four complete certificates, which is the target of the scarcity of sea and air special equipment. Mainly engaged in high-performance polymer materials products, sea and air special equipment products, mostly belong to a single source of procurement, underwater special equipment is to fill the gaps in domestic related fields. According to the performance commitment, Golden Shipping's net profit in 2017 is about 117 million yuan.
Taking into account the following factors: 1) the impact of military reform on equipment bidding will gradually weaken in 2018. Jin Shipping may usher in a compensatory increase in orders; 2) the substantial expansion of the Marine Corps and the increase in equipment demand brought about by military trade; and 3) accelerated finalization and installation of a variety of equipment products and continuous development and mass production of new products. In the process of accelerating integration with listed companies, Jinhai is expected to continue to start high performance growth in 2018.
Profit forecast: we estimate that the net profit of Tianhai Defense in 2017-2019 is 190 million yuan, 260 million yuan and 326 million yuan respectively; the EPS is 0.20 yuan, 0.27 yuan and 0.34 yuan respectively; and the PE corresponding to the current stock price (closing price of 6.87 yuan on January 2, 2018) is 35x, 25x and 20x respectively. For the first time, we give a buy rating, with a target price of 8.95 yuan.
Risk hint: the shipbuilding market remains in the doldrums; the volume of sea and air equipment is less than expected.