标题：Bauing Construction Holding GroupStake in Innovaconn to expand into special-purposed networks
发布日期：2016-03-09 10:09:07
内容： What's new Bauing plans to invest another Rmb100mn in ShenzhenInnovaconn Systems, bringing its stake to 20%. Comments New earnings growth driver. In 2015, Innovaconn’s revenuewas Rmb98.05mn and net profit Rmb1.17mn. It promises netprofit of no less than Rmb35mn, Rmb70mn and Rmb140mn over2016~18, respectively. After the capital increase, Innovaconn’svaluation would be Rmb500mn (14x 2016e P/E), much lowerthan comparable listcos. A 20% stake could bring investmentreturns of Rmb7mn in 2016, 1.9% of Bauing’s 2015 net profit. Cooperation to expand domestic and overseas smart citybusiness. Innovaconn focuses on the development, productionand distribution of wireless broadband special-purposed networksystems and terminals. Continuous external expansion demonstrates excellentexecution. An important follow-up to its investment in WuhanSyscan. Bauing plans to expand into information security, theconstruction of special-purposed networks for government, andpolicing affairs, and build its “internet + building decoration” IoTe-commerce ecosystem. Valuation and recommendation Visible growth potential; attractive valuation. Net profit togrow 32% in 2016e, 28% in 2017e. The company is trading at26x 2016e P/E and 20x 2017e P/E, which is near the sector’saverage; its valuation is attractive. Maintain TP of Rmb13.4(35x 2016e P/E) and BUY rating. Future catalysts include:1) further easing in real estate or monetary policies; 2) continuedM&A; 3) smooth progress in “Internet+” and overseas business. Risks Decline in decoration business amid sluggish investment;earnings of acquired companies miss expectations.
发布日期：2016-03-09 10:09:07
内容： What's new Bauing plans to invest another Rmb100mn in ShenzhenInnovaconn Systems, bringing its stake to 20%. Comments New earnings growth driver. In 2015, Innovaconn’s revenuewas Rmb98.05mn and net profit Rmb1.17mn. It promises netprofit of no less than Rmb35mn, Rmb70mn and Rmb140mn over2016~18, respectively. After the capital increase, Innovaconn’svaluation would be Rmb500mn (14x 2016e P/E), much lowerthan comparable listcos. A 20% stake could bring investmentreturns of Rmb7mn in 2016, 1.9% of Bauing’s 2015 net profit. Cooperation to expand domestic and overseas smart citybusiness. Innovaconn focuses on the development, productionand distribution of wireless broadband special-purposed networksystems and terminals. Continuous external expansion demonstrates excellentexecution. An important follow-up to its investment in WuhanSyscan. Bauing plans to expand into information security, theconstruction of special-purposed networks for government, andpolicing affairs, and build its “internet + building decoration” IoTe-commerce ecosystem. Valuation and recommendation Visible growth potential; attractive valuation. Net profit togrow 32% in 2016e, 28% in 2017e. The company is trading at26x 2016e P/E and 20x 2017e P/E, which is near the sector’saverage; its valuation is attractive. Maintain TP of Rmb13.4(35x 2016e P/E) and BUY rating. Future catalysts include:1) further easing in real estate or monetary policies; 2) continuedM&A; 3) smooth progress in “Internet+” and overseas business. Risks Decline in decoration business amid sluggish investment;earnings of acquired companies miss expectations.
