The most popular Qifeng new material acquisition t

2022-08-07
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Qifeng new material: it is reasonable to acquire the target company's products to break the international monopoly valuation. Release date: Source: CSI

when replying to the exchange's inquiry on the evening of May 13, Qifeng new material said that Shandong Warsaw New Material Co., Ltd. (hereinafter referred to as "Shandong Warsaw") which the company plans to acquire has broken through the high and medium grade sandpaper base paper technology, broken the monopoly of foreign companies, and is the only company in China that can stably provide high Manufacturer of medium grade sandpaper base paper; The dynamic P/E ratio corresponding to the overall valuation of 150million yuan is 11.54 times, which is lower than the dynamic valuation level of comparable transactions. Considering that Shandong Warsaw is still in the stage of rapid growth, this assessment is reasonable

import substitution of products

in the inquiry reply, the company quoted the certificate issued by Coated Abrasives branch of China Machine Tool Industry Association as saying that before 2018, the main production capacity of sandpaper base paper in China was low-end sandpaper base paper such as oil proof paper, and medium and high-end sandpaper base paper such as kraft paper and latex paper were mainly imported. In 2018, Shandong Warsaw new materials Co., Ltd. broke through the high and medium grade sandpaper base paper technology, breaking the monopoly of foreign companies. It is the only manufacturer in China that can stably provide high and medium grade sandpaper base paper in batches, and can replace similar imported kraft paper and latex paper products

the company said that at present, there are more than 30 mature varieties of sandpaper base paper in Warsaw, Shandong, filling a number of gaps in domestic technical fields. After entering the market, Shandong Warsaw latex paper has reduced the cost for customers and shortened the ordering cycle. With its excellent performance and cost performance, it has been widely recognized and praised by domestic customers. At present, Shandong Warsaw has established cooperative relations with more than 30 domestic cooperative customers and more than 90% of domestic sandpaper manufacturers. Its products have been exported to India, Japan, South Korea and other countries. It has established cooperative relations with 3M company, Nikken, RIKEN, star, golden sun, Jinniu, Fengmang and Yuli, which represent high-end brands in the sandpaper base paper industry. At present, Shandong Warsaw has an annual production capacity of 15000 tons. The high cost performance of products has enabled it to achieve rapid growth. In 2018, the product sales volume was 938 tons, and in 2019, the product sales volume was 3968 tons, an increase of 323%. From 2018 to 2019, the operating revenues were 14.45 million and 60.29 million respectively, and the net profits were 2.25 million and 7.55 million respectively. The revenue growth rate was 317% and the net profit growth rate was 235%. As of April, 2020, Shandong Warsaw has signed contracts in hand with a total amount of 95.4 million yuan, which is close to the level of 2019. Production has been arranged and delivery has been made in succession. With the development of the market and the passage of time, product orders will be signed successively after the report date

from the perspective of market space, the global sandpaper base paper market capacity will be about 90000 tons in 2020, of which the high-end sandpaper base paper latex paper market capacity will be about 40000 tons, the middle-end sandpaper base paper will be 20000 tons, and the low-end sandpaper base paper will be 30000 tons. The annual market demand of domestic high-end sandpaper base paper is about 11000 tons, the annual market demand of the middle end is about 9000 tons, and the annual market demand of the low end is about 6000 tons. In 2019, Shandong Warsaw sold 3093 tons and 889.4 tons of high-end and middle-end sandpaper base paper respectively, accounting for 28.1% and 9.9% respectively; It is expected that in the next few years, the domestic high-end sandpaper base paper market in Warsaw, Shandong Province will accelerate the formulation of unit clinker emission limit standards, and the market share of medium and low-end sandpaper base paper will increase to more than 60%, and the market share of medium and low-end sandpaper base paper will increase by more than 50%. At the same time, Shandong Warsaw is also actively exploring the international market and increasing exports. At present, its products have been exported to South Korea, Japan, India and other countries. The foreign market originally mainly imported sandpaper base paper products from France and the United States. The price is about 20% higher than that of Shandong Warsaw high tensile testing machine. Shandong Warsaw products will have greater cost performance advantages in these foreign markets

acquisition reduces related party transactions

as for the issue that the counterparties of this transaction are mainly the spouses of the company's actual controllers, directors and senior executives, the company explained that when Shandong Warsaw was established, the listed company did not participate in the investment in Shandong Warsaw because the prospect of the proposed sandpaper base paper business was unclear, it lacked relevant technology, and it did not conform to the strategy of the listed company to continue to develop decorative base paper at that time. At present, the technology and products of Shandong Warsaw have matured, the products have been highly recognized by the market, the market share is still in the early stage of expansion, and there is a large room for growth in the future. Based on its strong product competitiveness and import substitution ability, Shandong Warsaw has gradually increased its market share. In the future, the valuation of Shandong Warsaw will be higher. At this stage, the premium of Shandong Warsaw is a reasonable valuation. The actual controller, directors and senior management of the company invested and established the target company with family funds, and undertook the early wind of the project for replacement; The main engine is equipped with security protection insurance. Under the condition that the project value has not been fully released, this acquisition is carried out to reduce the increasing number of connected transactions. There is no transfer of interests, nor is there any use of position convenience to damage the interests of the company and minority shareholders

as for the problem that part of the equity of Shandong Warsaw has not been acquired this time, the company explained that 2. The installation is simple, and the party who did not sell the equity believes that the target company is still in the early stage of rapid performance growth, and the valuation of this transaction does not meet its expectations, so it does not agree to transfer the equity. As of the issuing date of the reply, the company has not reached an equity acquisition agreement with it

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