Stimulated by the news that it intends to wholly-owned Shengjiu Forgings, the stock price of Xinqianglian (300850) resumed trading on January 10 and closed up 11.34% sharply.
It is understood that on the evening of January 9, Xinqianglian disclosed the restructuring draft. The company plans to acquire 51.15% equity of Shengjiu Forgings for 972 million yuan. After the transaction is completed, the company will hold 100% of the target company.
It is worth mentioning that on November 24, 2022, Xinqiang Liangang purchased a 2.2901% stake in Shengjiu Forgings from Jiaxing Huipu, with a target valuation of 1.534 billion yuan at that time.
According to the current transaction price, the valuation of the target is 1.9 billion yuan. It is not difficult to see that the valuation of the target has increased significantly in less than two months.
In addition, for this merger, Xinqianglian also plans to raise supporting funds, some of which will be used to supplement the flow, but the company is not short of money. As of the first three quarters of 2022, the monetary funds on the account are 1.374 billion yuan.
The target valuation increased by 366 million in less than two months
The news that it intends to wholly own Shengjiu Forging made the stock price of Xinqianglian soar on January 10.
According to the trading market, Xinqianglian resumed trading on January 10 and opened sharply higher by 6.76%, and the company maintained a high and volatile situation throughout the day.
As of the close of the day, Xinqianglian’s share price was 59.32 yuan per share, an increase of 11.34%, with a total market value of 19.56 billion yuan, a full-day turnover of 1.071 billion yuan, and a turnover rate of 9.26%.
On the news, on the evening of January 9, Xinqianglian announced that the company plans to acquire 51.15% equity of Shengjiu Forgings for 972 million yuan. After the transaction is completed, the company will hold 100% of the target company.
According to the data, Shengjiu Forging is mainly engaged in the R&D, production and sales of industrial metal forgings, which are the key basic components of the high-end equipment manufacturing industry. The company's products are mainly used in the wind power industry.
In 2020, 2021, and the first three quarters of 2022, the revenue from wind power equipment forgings accounted for 93.45%, 90.89%, and 89.64% of the main business revenue of Shengjiu Forgings, respectively.
Xinqianglian is mainly engaged in the R&D, production and sales of large slewing bearings, industrial forgings and shrink discs. Its main products include wind power main shaft bearings, yaw bearings, pitch bearings, shield machine bearings and key components.
According to Xinqianglian, Shengjiu Forging is a raw material manufacturer of a listed company and an upstream enterprise of the company.
The reorganization draft shows that the main customers of Shengjiu Forgings are bearing manufacturers such as Xinqianglian and Xinneng Bearing, and the customer concentration is relatively high. In 2020, 2021 and the first three quarters of 2022, the main business income of the top five customers accounted for The ratios are 99.72%, 99.87%, and 99.84% respectively.
In fact, on November 24, 2022, Xinqiang Liangang purchased a 2.2901% stake in Shengjiu Forgings from Jiaxing Huipu. The transaction price at that time was 35.1263 million yuan. billion.
According to the transaction price of Shengjiu Forging's 51.15% stake, the target valuation reached 1.9 billion yuan.
According to calculations, after less than two months, the valuation of Shengjiu Forgings increased by 366 million yuan.
Bu Naxin, vice president of the Science and Technology Industry Investment Branch of the China International Science and Technology Promotion Association and executive director of the strategic investment think tank, told Beijing Business Daily that in the A-share market, changes in the valuation of listed companies' acquisition targets may be mainly due to industry prosperity and target profitability. ability and other factors.
"However, there have been major changes in the valuation of the target in the short term. The reason and rationality of this may need to be explained by the company." Bu Naxin said.
In the reorganization draft, Xinqianglian also disclosed the risk of high value-added evaluation of the target company, saying that according to the results of the income method, as of the evaluation base date of September 30, 2022, the evaluation value of 100% equity of Shengjiu Forgings was 1.9 billion yuan , Compared with the book value of all shareholders' equity of Shengjiu Forgings on the evaluation base date of 1.091 billion yuan, the value-added value of Shengjiu was 810 million yuan, and the value-added rate was 74.25%, which is a higher value-added rate.
Monetary funds are abundant, but funds are raised to make up for the flow
Along with this acquisition, Xinqianglian also intends to raise 350 million yuan in supporting funds, part of which will be used to replenish the flow.
Specifically, Xinqianglian plans to issue shares for this acquisition to pay a consideration of 729 million yuan, and to pay a consideration of 243 million yuan in cash.
For the cash consideration of 243 million yuan, Xinqianglian will solve it through fundraising.
Xinqianglian plans to raise 350 million yuan. After excluding 243 million yuan, the company plans to use 97.0613 million yuan to supplement working capital. In addition, 10 million yuan will be used to pay intermediary agency fees and other related expenses.
It is worth mentioning that behind the fundraising to replenish working capital, New Strong Alliance is not short of money.
The data shows that as of the end of the first three quarters of 2022, Xinqianglian has sufficient monetary funds in its account, with 1.374 billion yuan.
In response to related issues, a reporter from Beijing Business Daily called the office of the secretary of the board of directors of Xinqianglian for an interview, but no one answered the phone.
According to the data, Xinqianglian landed on the A-share market in July 2020. Since its listing, the company has been regarded as a "top student" in the A-share market. In 2020 and 2021, its revenue and net profit are both in a state of year-on-year growth. Quarterly company performance fell sharply.
On the evening of October 25, 2022, according to the third quarterly report of 2022 disclosed by Xinqianglian, the company achieved an operating income of approximately 691 million yuan in the third quarter of that year, corresponding to an attributable net profit of approximately 91.2537 million yuan, a year-on-year decrease of 59.38%.
In the first three quarters of 2022, Xinqianglian achieved operating income of approximately 1.953 billion yuan, a year-on-year increase of 2.79%; correspondingly, the attributable net profit was approximately 334 million yuan, a year-on-year decrease of 16.56%.
Affected by the sharp drop in performance in the third quarter of 2022, Xinqianglian's stock price fell by the "20cm" limit on October 26, 2022, and the company's stock price has continued to fall since then.
According to the statistics of Oriental Fortune, in the 47 trading days from October 26 to December 29, 2022, the cumulative decline in the new strong alliance range reached 47.09%, and the market rose by 3.35% during the same period. It hit a low of 51.85 yuan per share during the day.
Xu Xiaoheng, an investment and financing expert, told a reporter from Beijing Business Daily that the stock price of a listed company ultimately depends on the fundamentals of the company, and it is normal market behavior for investors to "vote with their feet" when their performance falls short of expectations.
For this wholly-owned holding of Shengjiu Forgings, Xinqianglian also stated that it will further enhance the company's profitability and sustainable development.
Financial data show that the performance of Shengjiu Forgings has also been growing steadily in recent years. In 2020, 2021, and the first three quarters of 2022, Shengjiu Forgings will achieve operating income of approximately 783 million yuan, 1.086 billion yuan, and 897 million yuan respectively; The realized net profits were about 58.0927 million yuan, 103 million yuan, and 90.893 million yuan respectively.
Xinqianglian said that due to the rapid development of the industry, policy support, high customer recognition, and the release of new production capacity, the sales of forgings for wind power equipment have increased significantly, and the operating income and net profit of the target company have increased significantly during the reporting period.
It is understood that the actual controllers of Xinqianglian are brothers Xiao Zhengqiang and Xiao Gaoqiang. Among them, Xiao Zhengqiang is the director and chairman of Xinqianglian, and Xiao Gaoqiang is the director and general manager of Xinqianglian. Both are from Ruyang County, Luoyang City, Henan Province.
According to the "2021 Hurun Report", Xiao Zhengqiang and Xiao Gaoqiang became the new richest people in Luoyang, with a combined net worth of 8.4 billion yuan.