On November 14, Yihua shares (002897, SZ) issued an announcement to reply to the inquiry letter of Shenzhen Stock Exchange. According to Yihua shares, there is no interest transmission in the company, and there is no damage to the interests of investors.
The reporter of the daily economic news noted that the reason why Shenzhen Stock Exchange issued the inquiry letter to Yihua shares was related to a related merger and acquisition planned by Yihua shares. The target company of the merger and acquisition was Yueqing Yihua New Energy Technology Co., Ltd. (hereinafter referred to as Yihua new energy).
Multiple shareholders of the subject matter of merger and acquisition are related persons
The Shenzhen Stock Exchange will issue the inquiry letter to Yihua, starting with an announcement of Yihua on November 1 this year. On November 1, Yihua issued the announcement on acquisition of 100% equity of Yueqing Yihua New Energy Technology Co., Ltd. and related party transactions (hereinafter referred to as acquisition announcement), which disclosed a related party acquisition.
According to the acquisition announcement, on October 29 this year, Yihua shares signed an asset purchase agreement with 11 natural persons including Chen Yu, Chen Yueqiu, Zhu Songping, Fang Xulong and CAI Shengcai. The target of the acquisition is Yihua new energy. The transaction price of 100% equity of the target asset agreed by all parties is 515 million yuan.
According to the financial information provided by the acquisition announcement, as of May 31, 2019, the owners equity of Yihua new energy is about 129 million yuan, and the total assets are about 505 million yuan. From January to may 2019, the operating revenue is about 337 million yuan, and the net profit is only 18.3417 million yuan.
It is worth noting that 5 of the 11 natural person shareholders of Yihua new energy are related persons of Yihua shares. Among them, Chen Yu is the son of Chen xianmeng, the chairman of Yihua Co., Ltd.; Chen Yueqiu is the spouse of Fang Jianbin, the director of Yihua Co., Ltd.; Zhu Songping is the director of Yihua Co., Ltd.; Fang Xulong is the son of Fang Jianwen, the director of Yihua Co., Ltd.; CAI Shengcai is the director of Yihua Co., Ltd.
According to the reporters calculation, the above five related persons hold 62.51% of the equity of Yihua new energy. This means that these related people account for the majority of the target equity.
According to Yihua, the core product of Yihua new energy is photovoltaic tracking bracket. This seems to have a low relevance with the main product communication connector of Yihua.
In terms of the intention of M & A, Yihua said in the acquisition announcement: M & A can provide new profit growth points for the performance of listed companies and further enrich business types.
The third quarter report of Yihua in 2019 shows that the owners equity of Yihua as of September 30 is RMB 1.185 billion. This also means that the consideration to be paid for this connected merger and acquisition is 515 million yuan, accounting for more than 40% of the owners equity of Yihua. For Yihua, this is a big deal.
Valuation rationality is concerned
According to qixinbao, the establishment date of Yihua new energy is September 14, 2015, and the company, which has been established for more than four years, has been sold for 515 million yuan. In the asset appraisal report on new energy of Yihua disclosed by the company, two appraisal methods are used to evaluate the value of 100% equity of new energy of Yihua. Among them, the appraisal value of income method is 519 million yuan, with the appraisal value-added rate of 347.8%; the appraisal value of asset-based method is 166 million yuan, with the appraisal value-added rate of 43.54%.
The difference between the two methods is about 353 million yuan, and the difference rate is as high as 211.97%. However, Yihua finally adopted the income method with higher appraisal price as the appraisal conclusion, that is, the total equity value of shareholders of Yihua new energy is 519 million yuan.
It is worth noting that, according to the disclosure of Yihua shares, in March 2018, Yihua new energy carried out an equity transfer, with Yang Xiangfu as the transferor and CAI Shengcai as the transferee. The transfer object of both parties is 2.2286% of Yihua new energy, and the transfer consideration is RMB 121297472.
If calculated according to the latest transfer price, the 100% equity valuation of Yihua new energy in March 2018 is only 54.4277 million yuan. That also means that in more than one year, Cai Shengcai, the director of Yihua, increased the value of this investment by 846%. According to the price difference, the 2.2286% equity alone made a net profit of more than 10 million yuan.
The valuation issue has also attracted the attention of Shenzhen Stock Exchange. In its letter of concern, Shenzhen Stock Exchange asked Yihua shares to explain whether there is any difference between the valuation of this transaction and the valuation of each capital increase transfer of the target company, if so, please explain the reason and rationality, explain the rationality of the valuation of this transaction and the reason for the high value-added rate of this transaction.
For the price difference between the transaction and the previous one, there are two main reasons for the explanation of Yihua: first, the basic aspects of the target enterprise are different, the business performance and competitiveness are greatly improved, and the overseas layout is realized in cooperation with the core customer strategy, so the development prospect is further clear; second, the transaction is the total transfer of control, and the counterparty has a commitment to the performance in the next three years Nuo.
As for the reason why the income method with higher premium rate is adopted, Yihua shares explains that: the market resources, R & D capabilities, management team and other intangible resources owned by Yihua new energy are difficult to be measured and quantified one by one in the asset-based method and other evaluation methods, and the asset-based method is not suitable for this valuation.
Yihua said that the value assessed by the income method reasonably reflects the real value of Yihua new energy, and the transaction consideration determined by reference to the value assessed by the income method is fair and reasonable, without any damage to the interests of investors.
Company: no interest transfer
In the inquiry letter, Shenzhen Stock Exchange also asked Yihua shares to explain the necessity of this related party transaction and whether there is any interest transmission to related parties.
In response to the need for trading, Yihua said that the companys performance growth rate slowed down and its profits declined. Through extensive M & A, the company enriches its business types, improves its profit scale, and expresses its optimistic outlook on the solar photovoltaic power generation industry, as well as the target companys high-quality customer base, technical strength and profitability.
As for the issue of interest transmission, Yihua shares believes that the pricing of this transaction is reasonable and fair, and there is no case of interest transmission to related parties.
Yihua listed three listed companies in the same industry, namely Qingyuan (603628, SH), Aikang Technology (002610, SZ) and Zhenjiang (603507, SH). The average static P / E ratio of these three listed companies is 60.25 times, while the P / E ratio of Yihua Xinnengyuan acquired by Yihua is 7.92 times. Therefore, Yihua believes that the price earnings ratio of its M & A is significantly lower than the average level of comparable listed companies in the same industry.
In addition, the counterparties of this merger and acquisition also committed to the listed company that the total net profit achieved by Yihua new energy in 2019, 2020 and 2021 will not be less than 225 million yuan.
In reply to the inquiry letter issued by Shenzhen Stock Exchange, Yihua said that the cumulative sales revenue of Yihua new energy from January to October 2019 has reached about 950 million yuan, and according to the production scheduling and delivery plan, the delivery amount in November and December 2019 will exceed 250 million yuan, that is, the annual sales volume of Yihua new energy in 2019 is expected to reach about 1.2 billion yuan, and the orders of Yihua new energy are sufficient and well executed OK.
Source: editor in charge of daily economic news: Yang bin_nf4368