Longji shares (601012) acquisition event review: overseas production capacity layout to avoid the barriers to trade and increase profits
The company announced that it is proposing to acquire 100% 佛山桑拿网 equity of Ningbo Jiangbei Yize New Energy Technology Co., Ltd. in cash. The benchmark price of the transaction is tentatively set at 17.800 million US dollars, and pay the floating consideration or performance compensation by performance promises according to the performance of the target company.All parties strive for 2020.8.Complete asset delivery by 30.  Comment: Efficiently obtain high-quality overseas capacity and fully absorb high-value US market dividends: The target company is mainly engaged in the production and sales of photovoltaic cells and modules. The production base is located in Vietnam. It currently has annual production capacity of over 3GW cells and over 7GW modules.Foundry.Through this acquisition, the company will quickly acquire the second overseas-scale production base after Malaysia, which will rapidly increase the company’s share in high-value overseas markets represented by the United States and significantly increase its profitability. Due to the obvious trade barriers in the US market, the prices of its photovoltaic modules are much higher than those in other overseas markets such as China and Europe.Southeast Asia is the most cost-effective source of photovoltaic modules outside of mainland China. Its products exported to the United States are exempt from double anti-tariffs (at the same time, 201 tariffs are exempted if two-way modules are exported), or the most profitable of all photovoltaic production capacity for the United States market.Origin. The acquisition’s contribution to the listed company’s actual profit increase or significantly exceeds the target company’s profit commitment: The target company is a photovoltaic cell module foundry company with a breakthrough in Southeast Asia. It has been a first-tier brand foundry product and sold to the US and European markets.According to the announcement, the target company’s non-net profit commitments for 2019-2021 are 2 respectively.2, 2.41, 2.51 ppm, and the first three quarters of 2019 net profit has reached 2.With US $ 4.8 billion, we believe that after superimposing the Longji brand premium, the actual profit contribution of this acquisition to the listed company is expected to significantly exceed the profit commitment level.Longji signed a long-term sales order of 1.3 billion silicon wafers with the target company for three years in July 2019. The close purchase and sales relationship in the early stage may also set the stage for this acquisition. The U.S. market that has benefited in the short term, and a long-term perfect international layout: the most important new energy support policy in the U.S. market, federal investment to resist tax exemption, ITC will begin a three-year downhill period by 2020, during which the U.S. photovoltaic market will maintain sufficient momentumAnd higher installed growth.The company quickly acquires high-quality Southeast Asian production capacity through acquisitions. In the short to medium term, it will give full play to its brand advantages and occupy the US market dividends. In the long run, through the core glass and other auxiliary materials industry chain to Southeast Asia, Vietnam ‘s production base may become the company ‘s international layout.An important link, radiating India, the Middle East and other emerging markets with great potential.  Taking profit adjustment and investment recommendations 杭州夜网论坛 into consideration, we increase the company’s 2019?Net profit forecast for 2021 is 52,70 (+ 3%), 88 (+ 6%) billion, corresponding to EPS of 1.37, 1.86, 2.At the same time, we believe that the gradual realization of photovoltaic parity on-line access and the improvement of the competition pattern brought by the continuous increase in industry concentration will help the sector to improve its transformation. We raise our target price to 46 yuan (+ 28%), corresponding to 25 times 2020PE, Maintain “Buy” rating.  Risk Warning: Uncertainty of the acquisition; domestic policies exceed expectations; product prices are lower than expected.