Superstar Technology (002444) Company dynamic comment: M & A and repurchase are expected to achieve steady growth
Actively respond to risk challenges and expect steady growth: The company’s latest performance forecast shows that net profit attributable to mothers in the first half of 2019 is expected to increase by 30% to 50% over the same period of the previous year.
Against the background of the complex international economic outlook, the company actively responded to systemic risks such as trade frictions, overcame its leading position in the industry and its international advantages, continued to focus on the development of its main business, and achieved operating income of 65 in Q1 2019.
The growth rate of 06% is far more than that of Sanfu Outdoor, Boshen Co., Ltd. and Industrial Fulian, whose main business is hand tools.
The company used outbound mergers and acquisitions and endogenous growth models to effectively alleviate the adverse effects of Sino-US trade friction tariffs and revenge on tailors.
In addition, since April this year, the domestic manufacturing industry has reduced the rate of increase from 16% to 13%, promoting the industry to reduce taxes and fees.
At the same time, the opening of the science and technology board is forming a favorable pattern for the machinery and equipment industry.
Driven by counter-cyclical stimulus and environmental protection upgrades, the company’s performance has achieved stable growth and continued to promote industrial integration, market expansion and strong production: the company is one of the leading companies in the domestic tool hardware industry with the largest scale, the highest technology and the strongest channel advantages, and is the largest in Asia, The world’s top ten hand tool companies.
With the increasing demand for the transformation and upgrading of China’s manufacturing industry and the repair business, the hand tool market will expand its tolerance accordingly, and the industry has potential for future development.
The long-term company’s industrial integration actions are obvious. It has successively acquired and restructured superstars, Arrow and Lista to strengthen its channel advantage.
In the second quarter of 2019, the company plans to jointly fund Zhongce Haichao with three related parties for a price of 57.
Acquired Zhongce Rubber for US $ 9.8 billion, owning US $ 4 billion, and the rest came from bank loans (84-month financing period).
The main counterparties are Hangzhou Zhongxin Dongchao Equity Investment Partnership 无锡桑拿网 (Limited Partnership), China Tire Enterprise Co., Ltd. and eight other Zhongce Rubber shareholders.
Zhongce Haichao will acquire a total of 46 Zhongce Rubber.
9489% equity, the company will indirectly hold Zhongce Rubber12.
9110% equity, basic income increased by 4 after completion of the transaction.
Zhongce Rubber is one of the largest rubber processing enterprises in China. It has formed multiple complete product systems including passenger car tires, all-steel series tires, bias series tires and two-wheeled tires.
The transaction will promote the establishment of in-depth cooperation between the two parties in market channels, further enhance the company’s industry position in the automotive aftermarket, and enhance the company’s comprehensive profitability.
At the same time, the acquisition will promote the company’s improved management and internal control.
The two-pronged approach of mergers and acquisitions and repurchases drives the value of investment and financing: in addition to benefiting from synergies, the company will increase investment income and increase assets while reducing asset-liability ratios.
During the reporting period, the company adjusted its share repurchase.
Since the end of 2018, the share repurchase has been implemented, and it is intended that the share repurchase will not exceed (inclusive) RMB17.
The price of 5 yuan / share is about 1 when the repurchase announcement is made through own funds.
06% of the shares are expected to scale from 120 to 100 million yuan.
In April 2019, the company issued an announcement to adjust the share repurchase program. The repurchased shares will be used to implement equity incentive plans, convert corporate bonds issued by listed companies that can be converted into shares, and safeguard the value of the company and shareholders’ equity.
The “change to” share repurchase will be used to convert all corporate bonds issued by listed companies that can be converted into shares.
If the company’s shares are used for the above purposes within 36 months after the completion of the share repurchase, the shares repurchased by the company will be transferred in accordance with the law.
“The adjustment will further protect the interests of investors, supplement liquidity funds, and raise funds for industrial integration and strengthening production.
As of the end of June, the company has cumulatively repurchased 10,799,651 shares through centralized bidding through the repurchase of special securities accounts, accounting for the company’s total share capital1.
Investment suggestion: We predict that the company’s EPS for 2019-2021 will be 0.
80 yuan, 0.
90 yuan and 0.
98 yuan, corresponding to PE is 13 times, 11 times and 10 times.
Maintain the “Recommended” level.
Risk warning: exchange rate risks still exist; raw material prices rise; synergies in acquisitions fall short of expectations.