On July 23, Zhuhai Zhongfu announced that the company plans to acquire the equity of several subsidiaries held by Asia Bottle (CVC's company and Zhuhai Zhongfu is the largest shareholder) for RMB 257 million, and Zhongfu Rubber Cover Co., Ltd. in Shenyang and Chengdu. Sex assets. The relevant proposals will be reviewed at today's extraordinary general meeting of shareholders. If passed, the core business of the above-mentioned assets, including plastic cans and paper cups, will be formally incorporated into Zhuhai Zhongfu's main business.
However, doubts about the acquisition came along. The reason was mainly that the asset was a related unlisted business of Zhongfu Group, a controlling shareholder of Zhufu Zhongfu, and was acquired and owned by Asia Bottle at the end of 2007. The Zhuhai Zhongfu acquisition price is 2.9 times the net assets of the acquired business, and the net asset premium is slightly higher. In the face of market queries, He Zhijie, vice chairman of Zhuhai Zhongfu and senior general manager of CVC Asia Pacific, recently received an interview with the Securities Times reporter.
Valuation method in line with international practice
He Zhijie said that the company is very cautious about this acquisition and has taken full consideration of all aspects involved. First, the acquired affiliated asset business is stable and has a good customer base. Among them, the users of plastic cans are major drinking water manufacturers such as Yibao, Jingtian, Watsons, Wahaha, Nestle, etc.; customers of paper cups are KFC, Diks, etc., and are among the top three cup suppliers in China. . In 2008, the combined business and net profit of the two businesses was 14.54 million yuan, while Zhuhai was only 48 million. If two businesses can enter a listed company, the increase in their revenue and profits will be very direct and substantial.
For the price that the investor is most concerned about, he explained that the related assets are operated with liabilities and the proportion of net assets is small. In particular, he pointed out that it is easy to overlook that if you measure this purchase price with the standards commonly used in international acquisition activities, it is actually not high, because the price-earnings ratio of the acquired assets is equivalent to 17.69 times the actual net profit in 2008, and the same indicator Zhuhai Zhongfu It is 85 times. Buying low-PE multiple corporate assets at high PE multiples means that it is cost-effective to buy better assets at lower prices. Many red chip companies in Hong Kong operate this way and comply with international practice.
In addition, according to statistics, Zhuhai Zhongfu’s acquisition of assets will increase by 5%-10% in the future. However, He Zhijie said that from the current development momentum, the increase will certainly exceed. Only KFC households will open more than 100 stores in the next few years. As the largest supplier of paper cups, the annual growth rate of 15%-20% should be expired.
Focus on business during the lock-in period
As a private equity fund, CVC entered Zhuhai Zhongfu with a high price of 8.2 yuan/share two years ago and hoped to withdraw from Zhuhai's rich value and then withdraw it in a suitable time and manner. However, to this day, CVC apparently did not wait for the desired result. Although the stock index rebounded sharply in the first half of the year, the company's stock price was only 6.84 yuan, and CVC's investment was still losing money. Although there is still a year away from its lock-up period, it is still necessary to draw a question mark when CVC can successfully withdraw.
In this regard, He Zhijie bluntly stated that from a capital investment point of view, CVC does not always hold Zhuhai Zhongfu’s equity, but within the lock-in period, it will definitely focus on the company’s operations, which is also the fundamental value of the company’s intrinsic value.
He Zhijie told reporters that after CVC entered the company, the company continued its original main business. Despite some difficulties and dissatisfaction, the company is currently operating stably, and the professional level and management ability of the adjusted management team are commendable. In the first half of this year, the company had a good momentum of business and net profit increased by 77% year-on-year. He said that if the asset acquisition can be successfully completed, the company's future profit margins will be further improved.
As for the PET beer bottle project, He Tanyan said that the project is still in the promotion period. At present, there is no obvious benefit. However, the company is still optimistic about the market prospects of the project and has no plans to abandon the project. In this regard, some market participants pointed out that the CVC has been largely responsible for the PET beer bottle market prospects, but more than 70% of the domestic beer market is low-end beer, making low-cost glass beer bottles still popular. With regard to the promotion of PET beer bottles, Zhuhai Zhongfu has been struggling but the market has not been opened. Judging from the current situation, it is clear that there is still a long way to go before the PET project becomes a new profit growth point.
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