Valin Steel (000932) Company Evaluation: Acquisition of 51% Equity in Yangchun New Steel by Cash
Event summary: In order to avoid potential competition with listed companies, the company’s controlling shareholder, Hualing Group, plans to pay cash by Hualing Xianggang, the company’s controlling subsidiary.
5.5 billion shares acquired 51% equity of Yangchun Xingang, and signed an acquisition agreement on September 6, 2019; South China’s fine bar and wire production base: Yangchun Xingang’s existing sintering, ironmaking, steelmaking, and rolling process equipmentThe main production line equipment includes 1250m3 blast furnace, 120T converter, etc. The products cover two major categories of wire and bar. The main varieties are rebar, construction wire, disc screw, wire drawing, round steel, which is only an annual production capacity of 280 steel.Among them, the bar 160 is 北京夜网 inserted into the top of the wire 120, which is an excellent production line of South China and an important production base of bar.
Actual steel output in 2018 was 316, and bar and wire output were 196 respectively.
73 initial and 119.
As of the end of the year, according to the disclosed production conditions from January to April 2019, assuming that the production is expected to be evenly distributed, it is expected that the annual output of rod and wire rods in 2019 will reach 211 tons and 129 tons, respectively, for a total of 340 tons, with a maximum capacity of 121.
43%; Yangchun New Steel Finance has obvious geographical advantages: from a financial point of view, 2016-2018’s profit has grown steadily, and its net profit has gone from zero.
8.6 billion to 10.
24 trillion, with a composite strength of 34.
69% 无锡桑拿网 and 244.
48%, consolidated net profit attributable to mothers in 201810.
37 trillion, according to the evaluation value on April 30 calculated PE is 3.
31X, lower than the average level of comparable transactions for listed companies in the same industry.
In addition, according to the disclosure of the announcement, from January to April 2019, net profit2.
1.5 billion tons, a net profit of 194 yuan per ton of steel, an improvement from 2018, but in line with the overall trend of the industry; period expense ratio4.
14%, the cost per ton of steel is 147 yuan, ending the end of April asset-liability ratio of 57.
53%, the best performance until 2016, continues to reduce costs and increase efficiency or hedge the impact of the industry’s boom.
Geographically, Yangchun New Steel is near the Yangjiang River deep-water harbour Baofeng Terminal in the south, Yunyang Expressway in the east, and convenient transportation. The ore is imported from the coast. The products are sold in Guangdong. The logistics cost advantage is obvious, and the company radiates the Pearl River Delta.In Guangxi, Hainan and other steel water purification areas, the demand for construction steel is strong, and the regional market has obvious advantages. The significance of the acquisition: After the completion of the acquisition, Yangchun New Steel will become a holding subsidiary of Hualing Xiangsteel, which will help listed companies to further improveRich existing product structure, optimizing the market layout in developed coastal economic areas, and at the same time can achieve the increase in the scale of listed companies’ income and profit levels, so that listed companies can increase their performance, enhance their overall competitiveness and sustainable development capabilities.Conducive to protecting the interests of shareholders of listed companies, especially small and medium shareholders.
In addition, the acquisition will reduce the daily connected transactions between the listed company and Valin Group; investment advice: As a leading steel company in the central and southern regions, the company’s profit will follow the fundamental changes in the industry.
In the case of industry demand is not pessimistic, how to gradually increase the profit level attributable to shareholders of listed companies through the company’s restructuring financial burden utility and Yangchun New Steel injection in the future.
The company’s EPS for 2019-2021 is expected to be 0.
94 yuan, 0.
98 yuan, 1.
03 yuan (without excluding the influence of minority shares of “Sangang”), maintaining the “overweight” level; risk warning: macroeconomic development trends cause demand pressure; supply-side pressure continues to increase