Zhongbai Group (000759) Matters Comment: Yonghui’s tender offer has been promoted by the national regulatory authority to promote comprehensive improvement through operational efficiency
Event: On August 21, 2019, Zhongbai Group issued an announcement stating that Yonghui Supermarket Co., Ltd. had received the “Decision on Prohibition of Antitrust Monopoly Review of Concentration of Operators” issued by the State Administration of Market Supervision and Administration.
Comment: On March 28, 2019, Yonghui Supermarket issued a written notice of the tender offer, intending to become the largest shareholder.
On March 28, 2019, the company accepted a written notice from the shareholder Yonghui Supermarket Co., Ltd. and was informed that Yonghui Supermarket intends to directly and indirectly hold the shares of Zhongbai Holdings Group Co., Ltd. through a tender offer.From the current 29.
86% increased to no more than 40%.
The number of shares acquired in this tender offer does not exceed 69,055,581 shares, and the tender offer price is 8.
10 yuan / share.
At present, the actual controller Wuhan State-owned Assets Supervision and Administration Commission holds a total of 34% of Zhongbai Group as the largest shareholder, and Yonghui Supermarket holds a total of 29 Zhongbai Group.
86% of the shares are the second largest shareholder.
If the tender offer goes smoothly, Yonghui Supermarket will become the largest shareholder of Zhongbai Group.
On August 20, 2019, Yonghui Supermarket received the “Decision on Prohibition of Antimonopoly Review of Concentration of Operators”.
On April 11, 2019, Yonghui Supermarket issued the “Summary of Tender Offer Report of Zhongbai Holding Group Co., Ltd.” to the company, providing a brief summary of the tender offer.
In accordance with the relevant provisions of the “Anti-Monopoly Law of the People’s Republic of China” and “State Council Regulations on Concentration Declaration of Operators” and other relevant regulations, Yonghui Supermarket submitted an application to the Anti-monopoly Review of Concentration of Operators to the State Administration of Market Supervision.
On August 20, 2019, the company received a notification from Yonghui Supermarket that Yonghui Supermarket had received the “Decision 武汉夜生活网 on Prohibition of Antitrust Monopoly Review of Concentration of Operators” issued by the State Administration of Market Supervision and Administration on the same day.
After review, the State Administration of Market Supervision and Administration did not prohibit Yonghui Supermarket Co., Ltd. from acquiring the equity of Zhongbai Holdings Group Co., Ltd.
The company’s non-homing net profit continued to improve, and Yonghui’s empowerment performance was expected to improve.
The company’s net profit after replacing non-recurring gains and losses was negative for three consecutive years from 2015 to 2017, and the net profit after replacing non-recurring gains and losses in 2018 was 0.
29 ppm, turning losses into profits.
In Q1 2019, the company’s net profit after deducting non-attribution is 0.
29 ppm, which is comparable to 2018 in a single quarter, and business conditions continue to improve.
Yonghui Supermarket is a leading supermarket company in the domestic A-share supermarket chain with a nationwide breadth and refined operation capabilities.
If the tender offer is completed, for Zhongbai Group, the deep intervention of Yonghui Supermarket will lead to the improvement of operational efficiency and the release of performance.
Earnings forecast and rating: We expect the company’s net profit attributable to the parent to be 1 in 2019-2021.
00 ppm, 1.
2 billion, 1.
4.7 billion; diluted earnings are 0.
15 yuan, 0.
18 yuan, 0.
Maintain the “overweight” rating.
Risk factors: Consumption recovery is not up to expectations, store expansion is not up to expectations, same-store growth.