Huayou Cobalt (603799) Company Review Report: Acquisition of Bamo Technology and Huayou Yinzhou Full Industry Chain Strategy Goes Further

Huayou Cobalt (603799) Company Review Report: Acquisition of Bamo Technology and Huayou Yinzhou Full Industry Chain Strategy Goes Further

Events: (1) The company intends to purchase 100% equity of Bamo Technology held by 8 trading counterparts, including Hangzhou Hongyuan and Xinba New Energy, by issuing shares. The transaction amount is tentatively set at 3.2 billion yuan, and the transaction is completed.Later the company will hold 100% equity of Bamo Technology.

(2) The company intends to issue shares to Cinda Xinneng to purchase its holdings of Huayou Luzhou15.

68% equity, the transaction amount is tentatively set at 862.4 million yuan. After the transaction is completed, the company will hold 100% equity of Huayou Yinzhou.

(3) The company intends to raise matching funds for non-public issuance of shares, the scale of which does not exceed 3.2 billion yuan, and the proposed issue price is 32.

24 yuan / share.

21 billion of the supporting funds are used in Bamo Technology’s “Advanced Intelligent Manufacturing Project for the Industrialization of High Energy Density Power Lithium Ion Battery Materials”, and one billion is used to supplement the company’s working capital.

(4) Dating strategic investors and increasing capital in wholly-owned subsidiary Huayou New Energy10.

9.4 billion.

Investment points: Acquire 100% equity of Tianjin Bamo Technology to strengthen the company’s new energy battery segment material business.

The company is an important domestic supplier of new energy materials cobalt, and has been strategically laying out the upstream, midstream and downstream industrial chains of new energy batteries.

Tianjin Bamo Technology is mainly engaged in the research and development, production and sales of lithium-ion battery battery materials. At the same time, it has built a domestic lithium-ion battery material industrialization base with high intelligence and strong comprehensive strength in Tianjin Xinxing Industrial Park and Chengdu Cheng’a Industrial Park in Sichuan.With an annual production capacity of 25,000 tons, the main customers are Ningde Times, BYD, Ningde New Energy, Samsung and LG.

In 2018 Tianjin Bamo Technology achieved revenue of 33.

44 trillion, down 11 a year.

46%; Net profit 8,609.

30,000 yuan, down 34 every year.

47%; Tianjin Bamo Technology’s net assets at the end of 2018 were 15.

6.6 billion.

The counterparty Hangzhou Hongyuan 南京桑拿网 promised that the net profit realized by Bamo Technology in 2019, 2020 and 2021 will not be less than 2 respectively.

1.5 billion, 2.

8 billion and 3.

6.3 billion.

Committed to growth in accordance with 2019 performance, this acquisition has a P / E ratio of approximately 24.

65 times, the estimate is more reasonable.

After the company acquired Tianjin Bamo Technology, it will help the company’s upstream and downstream collaborative development, strengthen research and development capabilities, and improve company performance.

Acquisition of Huayou Luzhou 15.

68% equity, a wholly-owned holding.

Huayou Luzhou’s main military cobalt, copper and nickel products research and development, production and sales, the main products include cobalt tetroxide, cobalt chloride, cobalt sulfate, cobalt carbonate, cobalt oxide and other cobalt salts and cobalt oxides.

Huayou Luzhou achieved revenue of 86 in 2018.

$ 4.5 billion, an increase of 44 per year.

2%; net profit 4.

08 billion, down 53 a year.

56%; At the end of 2018, Huayou Yinzhou’s net assets were 33.

1.7 billion.

Based on the growth of Huayou Luzhou’s 2018 performance, the P / E ratio of this acquisition is about 13.

48 times, which is reasonable.

As an important subsidiary and profit source of the company, wholly-owned Huayou Luzhou is conducive to increasing the company’s revenue.

Dating strategic investors and increasing capital for Huayou New Energy.

The company intends to increase the capital of Zhejiang Huayou New Energy Technology Co., Ltd., a wholly-owned subsidiary of Zhejiang Huayou New Energy Technology Co., Ltd. by 103.55 million yuan. At the same time, it is proposed that CITIC Investment, Guoxin Fund and other investors will increase the capital by 990 million yuan, for a total capital increase of 1.095355 million yuan.After the capital increase, the company holds Huayou New Energy 41.

42% equity.

Huayou New Energy is an important platform for the company’s new energy lithium battery material industry development. This capital increase is of great significance for the smooth implementation of related lithium battery material projects and for the company to build an internationally competitive lithium battery new energy material industry chain.

Cobalt prices have the potential to stabilize and rise.

The domestic market price of cobalt hit a minimum of 25 in late March.

380,000 yuan / ton, cobalt prices rebounded to 27 by mid-April.

83 million / ton, up about 9.


Mainly due to the increase of initial positive factors: the implementation of domestic new energy subsidy policies, the market’s anticipation of securities uncertainty is eliminated; new energy vehicle sales continue to maintain high growth, and sales growth in the first quarter of 2019 increased 117.

8%, downstream inventory replenishment demand rose.

The stabilization of the cobalt price is conducive to the stabilization of the company’s performance.

Earnings forecast and estimation: Without considering the issue of additional diluted shares, the company’s EPS for 2019-2021 is expected to be 2 respectively.

21 yuan, 2.

47 yuan and 2.

91 yuan, according to 42 on April 19.

At the closing price of 44 yuan, the corresponding PE is 19 respectively.

2 times, 17.

2 times and 14.

6 times.

At present, the company’s valuation is at the highest level in the industry, and the company continues to give the company an “overweight” investment rating.

Risk warnings: (1) the cobalt price continues to fall; (2) the progress of the fundraising and investment projects is less than expected; (3) the counterparty’s performance commitments do not meet expectations