Wingtech (600745): Anshi’s acquisition accelerates the value of strategic assets

Wingtech (600745): Anshi’s acquisition accelerates the value of strategic assets
Investment Highlights The 北京桑拿洗浴保健 company announced on May 21 its response to the first inquiry of the Securities and Futures Commission regarding the acquisition of Anshi Semiconductor. The CSRC withdrew its application on April 28, and the listed company received its first inquiry notice on May 8. This reflects the high degree of attention the regulator attaches to this acquisition and also confirms the significant strategic value of the underlying assets. After the completion of the acquisition plan, the corporate governance structure will be balanced, which will directly promote management improvement and strategic advancement capabilities. If the successful issuance of supporting financing is considered, after the transaction is completed, Zhang Xuezheng and the parties acting in concert will have control of the listed company16.35% equity; Gree related parties own 10.98% equity; Yunnan Urban Investment related parties hold 10.53%; Guolian IC has 10.41%.From the perspective of major shareholder shares, it includes both industrial investors, local governments, and integrated circuit funds, reflecting the decentralized and diverse structure of major shareholders. From the perspective of equity distribution, Zhang Xuezheng still has control over the board of directors.The share of equity is quite balanced.After the plan was adopted, each of the four major shareholders’ meetings pushed a non-independent director to the board, the number of which was the same as that of Zhang Xuezheng’s newly appointed non-independent directors. A fully balanced governance structure will directly promote the improvement of the management system and major strategic advancements of listed companies.ability. The interest expenses of the acquisition and appointment are generally controllable, and the production and operation and financial conditions will remain good.In terms of debt costs, assuming that the matching fundraising does not exceed 6.5 billion, the interest payable in 2019 and 2020 will be 4 respectively.27 and 6.40,000 yuan, after-tax interest expenses (assuming a tax rate of 25%) are 3.20 and 4.53 trillion, in line with United Nations expectations.According to our forecast, the company’s long-term ODM business will have an EBIT of approximately 10 in 2019 and 2020.53 ppm and 13.6.1 billion.According to the response to the inquiry, the EBITDA of AXA Group in 2018 was approximately 28.3.9 billion, we believe that the revenue growth rate of Anshi Group in 2019 and 2020 will be 7 respectively.4% and 25.8%, will still maintain a good growth momentum, comprehensive scale business data, the interest costs of acquisitions and appointments can be controlled overall.The announcement also announced the company’s analysis of working capital and operating cash flow based on prudent assumptions. Taken together, the company’s overall debt repayment risk compensation in the next two years, improved asset liquidity, net cash flow from operating activities, and production and operation conditions will remain good. The importance of Anshi Assets under the external pressure is prominent, and the synergy with ODM business will be more clear.Nominal Assets Ashi Semiconductor is a global IDM leader for more than 60 years. It competes in discrete devices, logic devices, ESD and power devices in the top three in the world.With 20,000 customers in the field, its excellent performance in basic components has replaced its internal shortcomings in this field. Under the background of increasing external pressure, the significance of AXA Assets has become more prominent.The approval process also reflects the parties’ recognition of this matter, and we believe that the certainty of the completion of the acquisition plan is very clear.The share of Anshi’s domestic customers still has a lot of potential cooperation with domestic manufacturers. Subsequently, Wentai Technology’s mobile ODM business has gradually complemented each other, and the 5G mobile phone replacement and intelligent Internet of Things business have emerged.In the future, the pioneers of New World’s new business in the domestic market have ample space, and the synergies brought by the dual-wing strategy will become increasingly clear. Investment suggestion: Considering that the company’s acquisition of Anshi Semiconductor has progressed rapidly, it is reasonable to combine the income statement of Anshi Group to evaluate the expected value.According to the current profit forecast of the mobile phone business, the net profit for 2019-2021 is expected to be 6.28, 9.31 and 1.2 billion yuan.We assume that the company’s acquisition of Anshi Semiconductor is expected to complete the integration at the end of 2019 and complete the supporting financing submitted at the same time to realize the repayment of some of the acquired debts of the Anshi Group. Therefore, it is estimated that the combined profit for 2018-2020 will be 9.19, 15.31, 23.USD 8.8 billion, of which the increase in profit in 2020 is mainly due to the elimination of some expenses after the completion of supporting financing at the end of 2019.Maintain BUY rating. Risk reminder: transaction termination risk, financing risk, approval risk, risk of higher appreciation of the underlying asset, integration risk, less than expected risk on 5G terminals, and risk of reduced semiconductor demand