Nanyang Stock (002212): Proposed sale of wire and cable business to focus on network security business

Nanyang Stock (002212): Proposed sale of wire and cable business to focus on network security business

Event: The company released an announcement on December 15, 2019: It intends to sell all assets and related rights and interests involved in the wire and cable business under the company’s name to related parties designated by Mr. Zheng Zhongnan, the controlling shareholder of the company. The underlying assets involved this time include:1. Guangzhou Nanyang 100% equity; 2. Nanyang Cable 100% equity; 3. Guangdong Nanyang 95% equity; 4. Nanyang New Energy 100% equity.

The wire and cable business is planned to be sold, focusing on the field of network security: the total consideration for the transfer of wire and cable business will be negotiated and determined by both parties based on the audit of the underlying assets.

This major asset sale does not involve the issuance of shares, does 杭州桑拿 not affect the company’s equity structure, and will not cause the company’s control to change.

After the completion of the sale, the company will no longer combine Guangzhou Nanyang, Guangdong Nanyang, Nanyang Tianjin and Nanyang New Energy to consolidate the scope of consolidated statements. The company’s wire and cable business in 2018 achieved revenue of 45.

5.5 billion, accounting for 72 of total revenue.

32% is the company’s main source of revenue. The reduction in the wire and cable business will reduce the company’s overall revenue volume; the company’s future business will mainly rely on Beijing Tianrongxin Technology Co., Ltd. to conduct business, and Tianrongxin will achieve revenue in 201817.

400 million, achieving net profit4.

97 ppm is the company’s main source of profit.

The asset sale will help the 杭州夜网 company focus on its business in the field of network security, improve asset quality and improvement, and enhance its sustainable operating capabilities.

Business focus and equity optimization began, and the company’s marginal improvement was obvious: since November, the company has announced changes in equity and business performance.

In terms of equity, the company’s controlling shareholder Mr. Zheng Zhongnan and the second largest shareholder Mingtai Capital were transferred separately.

85% and 2.

16% equity to Dianke.com.

In terms of business: the company intends to sell all assets and related rights and liabilities involved in the wire and cable business under the company’s name to related parties designated by the company’s controlling shareholder, Mr. Zheng Zhongnan.

The change in the company’s equity and business budget can make the company more focused on network security business. Instead, the divestiture of the wire and cable business will further increase the company’s valuation flexibility.

The company’s marginal improvement is obvious.

Investment suggestion: Due to the uncertainty of the sale of major assets, we will not consider the impact of the sale of wire and cable business on the company’s performance for the time being. Maintain the company’s net profit attributable to the parent company for 19-21 is 4, respectively.

18, 5.

65 and 7.

30,000 yuan.

We are optimistic about CLP’s participation in the government market expansion and the estimated flexibility brought by the transfer of wire and cable business. As a leading information security company, the company benefits from industry marginal improvements and emerging areas such as cloud security, data security, industrial control security, and security services.The performance flexibility brought by the layout, maintaining the “overweight” level.

Risk warning: CLP’s entry into shares is less than expected; pressure from shareholders’ reductions on expectations; mergers and acquisitions integration is less than expected; innovative business such as cloud security is less than expected; overall market level is falling.