Sany Heavy Industry (600031): Proposed acquisition of equity in Sany Auto Finance to promote the company’s shift to manufacturing + services

Sany Heavy Industry (600031): Proposed acquisition of equity in Sany Auto Finance to promote the company’s shift to “manufacturing + services”

Event: The company intends to use its own funds to acquire Sany Auto Finance Co., Ltd. 91 held by the controlling shareholder Sany Group.

43% equity, corresponding to a valuation of RMB 42.

21 trillion, the proposed transaction amount is RMB 39.

80 billion.

  It is proposed to acquire the equity of Sany Auto Finance to promote the company’s transition to “manufacturing + services”: Sany Auto Finance was approved to open in October 2010. It is one of the 25 auto finance companies in the country and mainly provides financial services to the construction machinery industry.

The value of the underlying company equity is 29.

11 trillion, referring to the existing transaction cases in the market, the market value of the valuation of 46.

1.7 billion, mainly because the equity estimate does not take into account the intangible value of financial companies’ financial licenses, customer resources and workforce.

The company intends to 39.

Acquired SANY Auto Finance 91 for a consideration of 8 billion.

43% equity, which promotes the company’s transition to “manufacturing + services”.

  Improving the efficiency of the use of its own funds, the auto finance business is expected to grow explosively: After the company acquires the target company, it will not be affected by connected transactions, and then it will significantly improve the auto finance business.

At the same time, existing listed companies have sufficient funds on their books, operating cash flows continue to flow in, and the development of auto finance business promotes the use of funds more efficiently.

As of the semi-annual report for 2019, the company’s gradual mortgage loan balance through Sany Auto Finance with a repurchase obligation was 32.

2.6 billion, the financing lease with a repurchase guarantee obligation is about 0.

6.6 billion.

Assuming that according to Sany’s sales revenue in 2019 and a 40% mortgage ratio, the overall size of the mortgage sales business is about 30 billion yuan, with nearly ten times more space. The auto finance business is expected to show explosive growth in the next few years.

  Digitally create intelligent risk control models, and replicate business models overseas to promote internationalization: After the company acquires Sany Auto Finance, it will build intelligent risk control models through its own digital capabilities.

For the moment, referring to other overseas brands, the biggest shortcoming of overseas sales is financial support. After the company acquires Sany Auto Finance, it will quickly export risk control models and financing talents overseas to quickly establish overseas financial platforms and enhance overseas business.Sales level.

  Profit forecast and investment advice: We expect the company’s net profit for 2019-2021 to be 115.

2.9 billion, 141.

6.7 billion and 154.

6.3 billion, corresponding to PE, 12 times, 10 times and 9 times, maintaining the “buy” level.

  Risk reminder: Domestic demand increases sharply, export growth is less 四川逍遥网 than expected, etc.