This report is read as follows:
It is planned to acquire the top suppliers of German auto parts in cash to achieve comprehensive corner overtaking in research and development, customer channels, production capacity and technology, and German land.
Events:
The company issued two announcements: 1) planned cash acquisition of German auto parts company SMK100% and German Land BorgWarner (BergWarner), Eberspacher (Ebesch), Bosch Mahle (Bosch Mahler), Bosch, Daimler and other world's top automotive manufacturers and first-tier suppliers; 2) Kaizhong Precision was designated as the mass supplier of new energy vehicle drive motor connector project by German Zaifu Group, with mass production in October 2018.
Comments:
Maintain and increase holdings. Consider the gradual expansion of the company's new business, maintain eps0.69/0.90/1.17 for 2018-20 years, maintain the target price of 17.13 yuan, and maintain the increase of holdings.
It is planned to acquire the top suppliers of German auto parts in cash to achieve comprehensive corner overtaking in research and development, customer channels, production capacity and technology, and German land. ① plans to acquire 100% stake in German SMK for 25.36 million euros in cash, with a net profit of 2.38 million euros (about 18 million yuan) in 2017, a year-on-year growth rate of 11%, corresponding to 10.6 times PE ② SMK was founded in 1950, mainly engaged in automotive power heat exchange system, gas exchange system and other core components, customers are mainly BergWarner, Ebeher, Bosch Mahler, Bosch, Daimler and other world-class companies, the products are used in Mercedes-Benz, BMW, Audi, Volkswagen, Porsche, Ford and other top automotive brands ③ R & D corner overtaking: the company will establish an European R & D and production center to serve the three electric components projects of new energy vehicles such as Daimler Mercedes-Benz, Bosch and ZF to further realize the company's globalization strategy; ④ customer channel corner overtaking: the company will obtain high-quality SMK customer resources and directly obtain or deepen cooperation with the world's top vehicle factories and first-class suppliers such as Bogwarner, Bosch and Daimler. ⑤ Germany land support expansion: the company is working with Daimler, ZF and other customers to develop new energy vehicle battery pack components, motor connectors, electronically controlled components and other new products, acquisition of Stuttgart, Dresden production base, and access to reserve land for future expansion to serve core customers nearby ⑥ technology corner overtaking: the company can have SMK high-precision laser welding technology and automated production design capabilities, comprehensively enhance the company's technical strength.
The advantages of overseas giant customers lock in the steady growth of all kinds of business. The revenue of ① commutator was 1 billion yuan in 2017, an increase of 15 percent over the same period last year, accounting for 72 percent of the revenue. Revenue from the three new businesses of high-strength elastic parts, automotive electronically controlled parts and lightweight parts, and multilayer insulated wires reached 290 million yuan, an increase of 58 percent over the same period last year, of which revenue from high-strength elastic parts was 180 million yuan, an increase of 60 percent over the same period last year. Gross profit margin increases 1pct. The sales of the top five customers of ② account for 45%. The leading customer advantages of Bosch, Japan Denso, Daimler and Marlborough ensure the steady supply and growth of the company's business.
Risk tips: acquisition failure risk, new business market expansion failure risk.