\u3000\u3000 Nbtm New Materials Group Co.Ltd(600114) (600114)
Event: on the evening of January 17, the company announced its intention to acquire 40% equity of Keda magnetoelectric and 97% equity of deqingxinchen.
After the acquisition, Keda magnetoelectric will become a wholly-owned subsidiary of the company, and the medium and long-term synergy with the parent company is expected to improve
The company plans to acquire the remaining 40% equity of Keda magnetoelectric with cash of 232 million. We believe that there are two impacts: 1) increase the equity ratio of Keda magnetoelectric from 60% to 100%, and further improve the consolidated profit statement; 2) The management further rationalized that in the future, the parent company is expected to continue to empower technology and management, and the medium and long-term synergy is expected to improve.
Acquire 97% equity of Deqing Xinchen, realize independent control of soft magnetic composite industry chain and improve profit margin!
The company plans to acquire 97% equity of Deqing Xinchen with 194 million yuan in cash. We believe that there are two impacts: 1) Xinchen is the main material supplier of Keda magnetoelectricity. After the acquisition, the company will realize the independent control of the soft magnetic composite industry chain and further promote the long-term strategic layout in the soft magnetic field; 2) In a real sense, the company’s soft magnetic business can benchmark Chinese peers Poco Holding Co.Ltd(300811) (300811. SZ). Previously, the difference in profit margin between the company and the benchmarking peers mainly lies in the layout of the industrial chain and the categories of raw materials used. The acquisition of raw material manufacturers is expected to directly improve the company’s gross profit margin. In the medium and long term, the profit margin will be close to China’s leader (platinum 2021q3 gross profit margin 35%; net profit margin 16%; Dongmu soft magnetic 2021h1 gross profit margin 27%).
The soft magnetic business (SMC) continues to grow rapidly and is expected to continue to benefit from the development of photovoltaic and new energy vehicle industries
SMC business: with a clear strategic position, it has been established as the priority development direction of the company. According to the official account of Huzhou Mogan Mountain high tech Zone, sales of Dong Mu Keda in 2021 exceeded 500 million yuan, up 64% over the same period last year. With the gradual return of raw material costs to normal, the business benefits from the development of photovoltaic and new energy vehicle industries, and the revenue is expected to maintain rapid growth.
Traditional powder metallurgy (PM) business stabilized; Metal injection molding (MIM) business is expected to be integrated and effective
PM business: the supply of 2021q4 chips is slowing down. Under the hybrid trend of new energy vehicles, the revenue is expected to stabilize and grow. MIM business: expect the integration to work gradually. In the medium and long term, MIM business is expected to benefit from the large volume of folding screen mobile phones. After collaborative integration, MIM business is expected to gradually increase in the automotive and medical fields, and MIM business is expected to have an inflection point.
Profit forecast: it is a leader in the field of equal material manufacturing. It is expected that the three businesses will cooperate, and it is expected to achieve 1 + 1 + 1 > 3 in the future
As a leader in the field of equal material manufacturing in China, the company’s PM / MIM / SMC three sectors belong to the new material powder metallurgy manufacturing branch. With the further integration of the company, the technology, business and management of the three sectors are further coordinated, and it is expected to achieve the operation effect of “1 + 1 + 1 > 3” in the future. Previously, three business reversal logics have been verified. Second: 1) PM revenue reversal; 2) SMC achieved high revenue growth; MIM business integration is poor in 2021, and it is expected that the performance will accelerate after the integration from 2022 to 2023. The SMC sector welcomes important changes and the profit margin is expected to improve. The profit forecast for 2022-2023 is raised. It is expected that the net profit attributable to the parent company in 2021-2023 will be RMB 0.2/2.4/330 million respectively, with a year-on-year increase of – 74% / 921% / 41%, corresponding to pe363 / 36 / 25X. Maintain the company’s “buy” rating.
Risk tips
1) impairment of goodwill; 2) MIM business development is less than expected
