\u3000\u3 China Vanke Co.Ltd(000002) 236 Zhejiang Dahua Technology Co.Ltd(002236) )
Event: the company’s application for non-public offering of 289million shares to China Mobile and raising no more than 5.1 billion yuan was approved by the development and Examination Committee of the CSRC.
Comments: the company’s non-public offering of 289 million shares raised 5.1 billion yuan at an issue price of 17.67 yuan / share for China Mobile. It is proposed to use the raised funds of RMB 930 million, RMB 776 million, RMB 890 million, RMB 1005 million and RMB 1.5 billion respectively for the R & D and industrialization projects of smart IOT solutions, the phase II construction project of Hangzhou intelligent manufacturing base, the construction project of Xi’an R & D center, the new project of Southwest R & D center and supplementary working capital. The implementation of fixed increase project funds is conducive to: 1) increase the investment in Internet of things technology and promote the company’s long-term development strategy; 2) Form long-term strategic complementarity with China Mobile and enable long-term performance growth.
Raise funds for investment in Internet of things technology to help the strategic development of smart Internet of things. The company adheres to the strategic position of smart IOT solution provider and operator service provider with video as the core, and provides one-stop smart IOT services and solutions for the digital transformation of cities, enterprises and families. According to iResearch consulting data, China’s Internet of things connectivity has achieved cagr69.5% between 2016 and 2020 1%, and the connection volume is expected to reach 15.6 billion in 2025; GSMA predicts that in 2025, the number of global IOT devices will reach 25.2 billion, and the smart IOT market will be broad. The company has built a smart IOT management platform for cities and enterprises in all walks of life to reduce management costs and improve digital management ability and efficiency. At present, the solutions have been applied to manufacturing, logistics, electric power, petrochemical, medical and other subdivided industries. This time, the company invested in the R & D and industrialization projects of smart IOT solutions, which is conducive to maintaining technical advantages and improving gross profit and customer stickiness; Investing in intelligent manufacturing base projects is conducive to expanding production and reducing cost; The construction of R & D centers in Xi’an and southwest China is conducive to improving R & D capacity and efficiency and breaking through technical bottlenecks. The successful implementation of the project fund-raising will further promote the strategic transformation of the company to a smart IOT solution provider and operator service provider with video as the core.
Form long-term strategic complementarity with China Mobile, and obtain strategic support and business coordination for business expansion. As the leader of comprehensive telecom operation enterprises, China Mobile ranks among the top in terms of user scale, network scale, brand value and market value all over the world. It can provide customers including individuals, families, governments and enterprises with high-quality information and communication related products, services and overall information solutions. In 2020, the total number of government and enterprise customers of China Mobile reached 13.84 million, the number of wired broadband customers reached 210 million, and the number of intelligent connections of the Internet of things reached 870 million. China Mobile has strong important strategic resources in terms of brand, channel, customers and products. The company and China Mobile have common areas in core technologies (5g, AI, Internet of things, big data, etc.) and customer groups (cities, enterprises, families). The cooperation between the two sides is based on product channel cooperation, joint research and development of products and solutions, technological innovation cooperation and industrial cooperation, which is conducive to improving the company’s market share and influence in the family, small and medium-sized enterprise market and government enterprise market, In line with long-term strategic significance.
Investment suggestion: optimistic about the implementation of fixed value-added project funds, and further help the company’s smart IOT strategic development; The company and China Mobile have formed long-term strategic complementarity and increased enabling performance. It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be RMB 4.505/56.65/6.799 billion, maintaining the “buy” rating.
Risk tips: audit risk and raised funds investment project risk, strategic transformation is less than expected, the industrialization process of smart IOT is less than expected, the construction progress of intelligent manufacturing base is less than expected, and the progress of R & D projects is less than expected
