●2007-10-26 Great Wall Development and Seagate cooperation into the honeymoon period (China Securities Journal)
Great Wall Development (000021) announced that it has signed a three-year P
CBA supply contract with Seagate International on October 18th.
Comment: The signing of this long-term supply agreement is more important because the company has been recognized by Seagate International, the world's most stringent contractor in terms of
quality requirements, and the honeymoon period of cooperation between the two sides is about to begin.
The inflection point of the company's upward performance has already appeared. If the company's cooperation with WD to build a factory in Thailand to receive orders progresses beyond expectations, it will
become another good thing.
As one of the world's two head assembly specialists, the company's pricing power over downstream
will improve as its business volume increases, and its future business to Seagate International will also be moved to Suzhou for production, so the company's profitability
will improve further in the future, and the market doesn't have to worry about its low net interest margins.
The signing of this agreement can basically dispel the worry that Seagate International's orders are not full. According to the company's existing PC
BA production capacity and the subsequent expansion plan, we believe that the company's PCBA production in 2008 is expected to reach more than 80 million pieces
. Simple calculation, the additional 20 million pieces of PCBA in 2008 can increase earnings per share by about 0.02 yuan.
●2007-10-25 Great Wall Development Hands Seagate International (China Securities Journal)
Great Wall Development (000021) today announced that the company's wholly-owned subsidiary Development Technology (Hong Kong) has
limited on October 18, 2007 and Seagate International Technology Inc. signed the "PCBA (Hard Disk Boards) Supply
Agreement", which stipulates that the company will supply PCBA (hard disk boards) to Seagate International.
Agreement
The agreement stipulates that the company will supply hard disk board products to Seagate for a limited period of three years. Seagate
is one of the world's major hard disk manufacturers.
The Great Wall Development said that the PCBA (Hard Disk Board) Supply Agreement signed by the company and Seagate, which does not involve
the quantity and amount of supply, its purpose and scope is to elaborate on the cooperation between the two sides *** knowledge, is the basis for the two parties to enter into and fulfill the specific supply business in the validity of the agreement
period, and each specific purchase order constitutes a complete agreement.
Currently the Company's business dealings with Seagate are progressing smoothly.
It is reported that Great Wall Development's hard disk board products are manufactured by Suzhou Great Wall Development
Development Technology Co., Ltd, an indirect wholly-owned subsidiary of Great Wall Development, which is currently supplying such products to Seagate. Suzhou Great Wall Development was established in July 20
05 with an initial registered capital of $15 million, began production in August 2006, and was approved by the board of directors
in April 2007 to increase its registered capital to $40 million.
From August to December 2006, the company's revenue from hard disk card sales was
354,365,700 yuan, and from January to June 2007, sales of hard disk cards amounted to $4,000,000 yuan, with a total of $4,000,000 yuan. In January-June 2007, the sales revenue was 604,883,800 yuan.
The announcement also said that Great Wall Development has been committed to the research and development, production and sales of hard disk drive-related products
since its establishment in 1985, and is currently the world's second largest professional manufacturer of hard disk drive magnetic heads. Great Wall Development
has always insisted on the deep interaction with international advanced enterprises and closely maintained business
correspondence with internationally famous multinational enterprises. The signing of this cooperation agreement further strengthens and deepens the cooperative relationship between Great Wall Development and internationally renowned hard disk drive
manufacturers, which will have a positive and far-reaching impact on the Company's internationalization strategy and medium- and long-term development
.
●2007-10-25 Great Wall Development to Launch Strategic Cooperation with Seagate (Securities Times)
Great Wall Development (000021) announced today that its wholly-owned subsidiary, Development Technology (Hong Kong)
Limited, signed the "PCBA (Hard Disk Board) Supply
Agreement" with Seagate International Technology Inc. on October 18, 2007, agreeing to provide PCBA (Hard Disk Board) supply
.
Agreement, which stipulates that GWD will supply hard disk board products to Seagate for a period of three years.
According to the report, the hard disk board products are produced by Great Wall Development's indirect wholly-owned subsidiary, Suzhou Great Wall Development Technology Company, which was established in July 2005 with an initial registered capital of $15 million, went into production in August 2006
, and was approved by the board of directors to increase its registered capital to $40 million in April 2007, and is now mainly engaged in providing PCBA (hard disk board) products to Seagate. Seagate
supplying such products. The company's August-December 2006 hard disk board sales revenue was $354.37 million, and January-June 2007 hard disk board sales revenue was $604.88 million.
The company's August-December 2006 hard disk board sales revenue was $354.37 million, and January-June 2007 hard disk board sales revenue was $604.88 million.
Since its establishment in 1985, Great Wall Development has been committed to the research and development, production and sales of hard disk drive-related products
and is currently the world's second-largest professional manufacturer of hard disk drive heads. The company has always insisted on the vertical and deep interaction with international
advanced enterprises, and has closely maintained business dealings with internationally renowned multinational enterprises, and is currently progressing well with
Seagate.
Some analysts said that the signing of the long-term supply agreement is more important because the company has been
recognized by the world's most stringent quality requirements of the contractor, the honeymoon period of cooperation between the two sides is about to begin, and the company
the inflection point of the cooperation with Seagate has been revealed. According to the company's existing PCBA production capacity and the subsequent expansion plan, it is predicted that
2008 the company's PCBA production is expected to reach more than 80 million pieces, and that the Great Wall Development, as one of the two global head-loading
dispensing professional manufacturers, the company's profitability will be further
improved in the future with the increase in business volume.
Great Wall Development said that the PCBA (hard disk board) supply agreement signed with Seagate did not involve the supply
quantity and amount, and its purpose and scope is to set out the cooperation between the two sides *** knowledge, is the two sides in the validity of the agreement to sign
and fulfill the basis of the specific supply business; the agreement will be with each specific order constitutes the complete agreement
This agreement is the first time that Seagate has signed the agreement with Seagate. p>. The signing of this cooperation agreement further strengthens and deepens the cooperation relationship between the Company and internationally renowned hard disk drive manufacturers,
and will have a positive and far-reaching impact on the Company's internationalization strategy and medium- and long-term development.
It is reported that Seagate is one of the world's largest hard disk drive manufacturers, and in recent years its hard disk drive business has been expanding very
good momentum, with factories in the United States, Mexico, Malaysia, China, Thailand, Singapore, etc., and as early as
1995, it set up its first hard disk drive assembly plant in China, which is the largest of its kind in the world
. On May 19, 2006, Seagate completed its acquisition of Maxtor, then one of the world's top five hard drive makers, through a share swap, as well as the purchase of the former Maxtor Suzhou hard drive manufacturing facility
. For the twelve months ended June 29, 2007, Seagate shipped 159.2 million hard drives on revenues of $11.4 billion, an increase of 23%, according to the company's fourth quarter fiscal 2007 report.
●2007-10-19 Great Wall Development (000021) Industry Consolidation Helps Technology Blue Chips Set Sail (China Securities Journal)
Sun Hua, a researcher at Huatai Securities, believes that Alps' orders slumped after Seagate's acquisition of Maxtor in 2006, and this year
exited from the magnetic-head industry, leaving only Great Wall Development and TDK as independent head assemblers. Since TDK and the company's
business scope is different, hard disk drive makers Seagate and WD head outsourcing business will inevitably favor Great Wall Development
, which allows the company to benefit from the industry consolidation. Raise the rating on the company to 'buy'.
With the release of Seagate's orders, the company's deepening cooperation with WD, and the growth of Ecto, researchers
expect the company's orders for magnetic heads in 2007-09 to reach 33 million, 54 million and 103 million units. In addition
, shipments of PCBAs for hard disks will also grow significantly. The company's soon-to-be-acquired Development Magnetic Recording is also currently in a period of oversupply of
products. Therefore, the company's hard disk-related business is currently in the best stage of development.
The company's own products, the meter this year, Italy and India's orders reached 3 million, while the cumulative orders of meters before 06
but 11 million. The company will continue to expand the European market, but also with
IBM cooperation in the North American market to promote the company's meter products. Tax-controlled cash registers in the second half of 2007, the market began to start
, but the researcher estimates that, due to fierce competition in the market, the company's revenue in the next few years in this category of products in the 200-300 million
yuan.
●2007-09-27 Great Wall Development intends to issue no more than 60 million shares (China Securities Journal)
Acquisition of 43% equity interest in Shenzhen Development Magnetic Recording Co.
Great Wall Development (000021) announced today that the company intends to issue to its controlling shareholder, Great Wall Science and Technology Co.
non-public offering of no more than 60 million shares to acquire 43% of Shenzhen Development Magnetic Recording Co.
Limited held by Great Wall Technology, making Development Magnetic Recording Co.
a controlling subsidiary of Great Wall Development.
The company said the issue is to extend the company's industrial chain, enhance the product supporting sales capacity, and
higher product market share and pricing power. After the completion of the issuance, it will promote the company's hard disk industry to the deep development
, extension, the formation of a more centralized, professional large-scale production, so as to improve the speed of industrial development and scale
modularity of the benefits. The company's main business will be more prominent, profitability greatly enhanced, able to create better returns for all shareholders
.
The target asset of this acquisition is Shenzhen Development Magnetic Recording Co., Ltd. which was established in December 1995
with a registered capital of RMB 251,362,600 yuan, and is currently ranked second in the world in terms of volume of production and sales, accounting for more than 20% of the world's HDD discs
base, and 100% of its products are sold to foreign countries, with a promising market outlook. As of the end of 2006, Shenzhen Development
Magnetic Recording Co., Ltd. has total assets of 844.51 million yuan, and realized sales revenue of 1,172.44 million yuan in 2006
, net profit of 141.64 million yuan, and 65.83 million yuan in the first half of this year. The company said the assets to be entered
have good profitability.
According to the regulations, the price of the issue will not be lower than the average price of the company's shares traded
on the 20 trading days before the pricing base date, which is 17.79 yuan per share. The non-public offering is subject to the approval of the company's shareholders' meeting and
reported to the Securities and Futures Commission for approval. The announcement said that before and after the issuance, the management relationship between the company and its controlling shareholders has not changed
and there is no competition in the same industry.
●2007-04-23 Great Wall Development's Strategic Layout in Yangtze River Delta (China Securities Journal)
Great Wall Development (000021) announced that the company's board of directors agreed to unilaterally increase its capital by 25 million US dollars to Suzhou Great Wall Development Science and Technology Co.
to hold a 62.5% equity stake in the company, and that the funds from the increase would be used for the Suzhou base's basic
Construction reinvestment, magnetic head project equipment and purification room investment and PCBA project equipment investment.
After the completion of the capital increase, the registered capital of Suzhou Great Wall Development increased to 40 million U.S. dollars, the total investment increased to 90
million U.S. dollars, the company and the development of science and technology (Hong Kong) Ltd. to hold its 62.50% and 37.50% of the equity interest
Suzhou Great Wall Development for the company's wholly owned subsidiary development of science and technology in July 2005, the sole proprietorship established,
Suzhou Great Wall Development for the company's wholly owned subsidiary development of science and technology. With a registered capital of
$15 million, the company began production in August 2006 and is currently engaged in the production of PCBA products for Seagate. As of December 31, 2006, Suzhou Great Wall Development had total assets of RMB117.54 million and net assets of RMB105.45 million, and the revenue of PCBA products business of Suzhou in 200
6 was RMB350 million.
Suzhou Great Wall Development design and put into operation, will form the annual output of magnetic head 40 million, PCBA 80 million, PC
CA 40 million production scale, is expected in November 2008, the first batch of equipment began production.
The Great Wall Development said that if the project is successfully implemented, the market competitiveness of the company's products will be further strengthened
, thus realizing the company's strategic layout in the Pearl River Delta and the Yangtze River Delta, which will have a positive and far-reaching
impact on the company.
The company's annual report shows that in 2006, the company realized main business income of 10.297 billion yuan, net profit of 3.
4.1 billion yuan, respectively, compared with the same period of the previous year, an increase of 27.76% and 8.19%. Earnings per share was 0.3879 yuan, and the net asset return
was 11 percent. However, the company's main business of hard disk-related products fell 15.18 percent year-on-year to
447,644.15 million yuan.
In 2006, a major merger and acquisition of Seagate's acquisition of Maxtor took place in the global hard disk industry, and orders for Maxtor's hard disk heads, one of the company's main products
, declined, and orders for the company's own product, the power meter, after
a sales peak in the previous few years, also stepped into a relatively low period.
However, Great Wall Development subsequently secured orders from Seagate for hard disk boards and in the first quarter of 2007
secured orders for Seagate magnetic heads. Seagate is the world's largest hard-disk drive maker, accounting for 35 percent of the global market share and
growing at an average annual rate of about 10 percent. Great Wall Development expects the company's 1Q 2007 results to increase
between 300 and 400 percent from the same period last year.
The Suzhou production base will mainly serve Seagate. Great Wall Development said that the commissioning of the Suzhou production base marks
a breakthrough in the company's strategic layout, creating the necessary
conditions and laying a solid foundation for the company's long-term sustainable development, and that the company will continue to increase its investment in Suzhou in order to meet the needs of the strong economic growth in the Yangtze River Delta
region and the future development of other customers.
●2007-04-04 Great Wall Development: Reduction of CITIC Securities results in a big increase (China Securities Journal)
The Great Wall Development (000021) today released an announcement of the first quarter of 2007 results increase, expected to be the first quarter of 2007
than a year ago, an increase of between 300%-400%. According to the announcement, the company reduced its stake in CITIC Securities
(600030), which is one of the main reasons for the substantial growth in results.
As of March 31, 2007, the company sold a total of 11,578,066 shares of CITIC Securities, realizing an investment
gain of about 401 million yuan. Great Wall Development's net profit for the same period last year was 84.4869 million yuan, with earnings per share of 0.1153 yuan
Data shows that Great Wall Development is a promoter shareholder unit of CITIC Securities, holding 13,774,923 shares of CITIC Securities after the equity distribution reform, which have been granted the right of listing and circulation on August 15, 2006
. In order to lock in the investment returns
and give shareholders a good return on investment, the company from January 2007 to reduce the "CITIC Securities" stake. At present, Great Wall Development still holds 2,196,857 shares of CITIC Securities, accounting for 0.07% of the total share capital of CITIC Securities.
●2007-03-05 Great Wall Development continues to reduce its stake in CITIC Securities (China Securities Journal)
Sale of shares to realize a cumulative investment income of about 289.9 million yuan
The Great Wall Development (000021) announced today that, as of the close of business on February 28, the company had sold a total of 878 million shares of CITIC Securities through the trading
system of the SSE. More than ten thousand shares. Preliminary estimates, the company sold CITIC Securities shares accumulated
realized investment income of about 289.9 million yuan.
And January 18 this year, the company announced that, as of January 15, 2007, the closing market, the company has been through the SSE
transaction system to sell a total of 4.92 million shares of CITIC Securities, the sale of investment income of about 148 million yuan.
That is to say, this month and a half, the company rely on the reduction of CITIC Securities again "gold" 141.9 million yuan.
As of the close of February 28, 2007, the Great Wall development has been through the trading system of the SSE cumulative sale of CITIC Securities
Securities 8,780,584 shares, the remaining CITIC Securities shares 4,994,339 shares, accounting for the total share capital of the CITIC Securities
0.17%.
According to the information, the Great Wall Development for CITIC Securities promoter shareholders, after the share reform to hold 13,
774,923 shares of CITIC Securities (shareholding ratio of 0.46%), and on August 15, 2006 to obtain the right to listing and circulation.
On January 18, 2007, Great Wall Development announced that the Board of Directors unanimously agreed that the Company would gradually reduce its holdings in CITIC Securities from January 4, 2007
.
As of the close of business on January 15, 2007, the company has sold a total of 4,921,599 shares of CITIC Securities through the trading system of the SSE, leaving a balance of 8,853,324 shares of "CITIC Securities" stock, accounting for 0.297% of the total share capital of CITIC Securities
. At that time, the company said it would gradually reduce its holdings of CITIC Securities in accordance with market conditions.
From last year, CITIC Securities stock price all the way up. 2007 March 2, CITIC Securities closed at 36.9
5 yuan / share, up 5.51% from the previous day. Because of the huge profits, CITIC Securities "small non-" the urge to reduce their holdings
has been constant.
●2007-02-06 Great Wall Development: Hard Disk Drive Business Shows Steady Momentum (Oriental Wealth)
The hard disk drive business of Great Wall Development (000021) is showing a steady momentum after last year's fluctuations. The scale is expected to be gradually released after the order with Seagate materializes.
The first quarter will be a low point for the hard disk business.
The company has the management capabilities and common foundry equipment of a good foundry, making it easier to gain customer acceptance and expand business.
The company has also recently acquired a Japanese manufacturer's camera business for cell phones, showing rapid progress in its foundry business
. The development of magnetic recording business under the company is progressing well. On the basis of the capacity of 10,000 square meters in 2005
, it expanded to 20,000 square meters in 06 and will increase to 29,000 square meters in 07, and the capacity scale will be increased by 45% compared with the previous year
. Its profit level is expected to realize 150 million profit in 06 on the basis of 100 million yuan in 05. It is expected
that the profit level will increase further in 07 in the context of capacity enhancement, and it will correspondingly enhance the contribution to the earnings of the Great Wall Development
. Historically, the company's performance has fluctuated mainly due to investment income, and the situation will change dramatically this year
. The company has reduced its ownership of CITIC Securities by 4.92 million shares and gained $148 million in investment income
. The company also owns 20 million shares of Everbright Bank, which is now gearing up for an IPO. If
If the listing is successful, it will mean that the corresponding stake in Great Wall Development will receive a sizable investment income.
Guotai Junan analyst Wei Xingwei expects the company's sales revenue scale in '06 to be about 10 billion yuan, and in '07 the revenue scale will be about 15 billion yuan, and in '08 it will be close to or even more than 20 billion yuan. It is expected that the company's earnings per share in '07 can
reach 1.00 yuan. The company's own business can get the industry average valuation level. Comprehensive calculation, give 16.16 yuan
the target price, rating "hold".
●2007-01-31 Great Wall development: magnetic head automated production line of the world's leading (Oriental Wealth)
Great Wall development (000021) 06 three quarters of the total assets amounted to 4.06 billion yuan, the net assets of 3.01 billion yuan, which
in the cash amounted to 1.65 billion yuan, the cash flow of operating activities of 590 million yuan; the company this year, January The company sold its stake in CITIC Securities
to recoup at least 150 million yuan in cash, and the company owns 21.45 million shares in Everbright Bank.
The company's self-developed automated production equipment, so that 90% of the magnetic head products to achieve automated or semi-automated
production, magnetic head products accounted for more than 10% of the global market share, is the world's largest professional magnetic head manufacturers
manufacturers, in 07 years has begun to Seagate supply. It is understood that in the first quarter of the supply is about 75K / week, then
supply will gradually increase, it is estimated that in the third quarter of this year to stabilize, the supply will reach 70K / day,
quarter will reach 5 million. It is understood that in 2007 Italy will purchase 4 million units of meters, the company will get
most of its orders; IBM commissioned the company to carry out the design of the meter, IBM and Italy ENEL cooperation will be in the
global promotion of this product. Tax-control system, in 2006 the company won the bidding in Guangdong Province, Hunan Province selection bidding
, Changsha has been in October 06 to start the pilot. The company's memory stick business is developing rapidly, and is expected to grow
to 16 lines in the future. The company has invested 100 million yuan to onna optical communications, 06 its profit is expected to reach 40-50 million
yuan, 07 up to 100 million yuan.
Galaxy Securities analyst Wang Guoping estimated that the company's 06 revenue was around 10-10.5 billion yuan, and income per share
was around 0.41 yuan. It is expected that the revenue will reach 15-16 billion yuan and 175-18.5 billion yuan in 07 and 08 respectively
right, with earnings per share of about 0.52 yuan and 0.65 yuan. Due to the recent surge, the rating is suspended for the time being.
●2007-01-09 Three Products of Great Wall Development Listed in 2006 Provincial Key Products (China Business Wire)
Recently, three products of Shenzhen Great Wall Development Technology Co., Ltd (Great Wall Development, 000021), namely, Tax
Control Cash Register (KF213), Three-phase Power Meter (DTSF67) and Single-phase Power Meter ( DDS67) were awarded "2006 Guangdong Key New Products" certificates by the Guangdong
Provincial Department of Science and Technology, and enjoy the policy of taxable income deduction for research and development (R&D) expenses of new products.
This is another three products that won the honor after the tax-controlled cash register (KF43202) and tax controller (KF218130) developed by Great Wall were listed in the key new products of Guangdong Province in
2005.
According to the relevant national and provincial regulations, the products included in the list of provincial key new products can enjoy
a series of preferential policies such as tax incentives and financial subsidies within two years, including the return of the new portion of the income tax after the first levy and
not less than 50% of the new value-added tax on the local share of the new portion. New product research and development costs are not subject to the proportion included in the management
expenses, an increase of 10% or more over the previous year's incurred amount, can be based on the actual incurred amount of 50% of the direct
deduction of the year's taxable income.
●2007-01-09 Three products of Great Wall Development are listed in 2006 Provincial Key Products (China Business Wire)
Recently, three products of Shenzhen Great Wall Development Technology Company Limited (Great Wall Development, 000021), namely, Tax
Control Cash Register (KF213), Three-phase Power Meter (DTSF67) and Single-phase Power Meter (DDS67), have been recognized by the Guangdong
Guangdong
. DDS67) were awarded "2006 Guangdong Key New Products" certificates by the Guangdong
Provincial Department of Science and Technology, and enjoy the policy of taxable income deduction for research and development (R&D) expenses of new products.
This is another three products that won the honor after the tax-controlled cash register (KF43202) and tax controller (KF218130) developed by Great Wall were listed in the key new products of Guangdong Province in
2005.
According to the relevant national and provincial regulations, the products included in the list of provincial key new products can enjoy
a series of preferential policies such as tax incentives and financial subsidies within two years, including the return of the new part of the income tax after the first levy and
not less than 50% of the new value-added tax on the local share of the new part. New product research and development costs are not subject to the proportion included in the management
expenses, an increase of 10% or more over the previous year's incurred amount, can be based on the actual incurred amount of 50% of the direct
deduction of the year's taxable income.
●2006-11-27 Great Wall Development 6-month target price of 10.50 yuan (China Securities Journal)
Chen Meifeng of Haitong Securities Research Institute expects Great Wall Development (000021) to post EPS of
0.39, 0.50 and 0.65 yuan for 2006-2008, respectively. Comprehensive DCF, PE and business valuation results, the company's share price should be
in the reasonable range of 9.14-11.70 yuan, to determine the six-month target price of 10.50 yuan. The company is rated "buy" for the first time.
Chen Meifeng believes that the company's long-term position in the EMS (electronic manufacturing services) / ODM (original design and manufacturing
) manufacturers. Its easy-to-replicate model, low capital investment, large-customer effect and sufficient cash reserves will enable
the company's EMS business to achieve sustained and rapid growth. In the long run, the company can be positioned as a specialized EMS/ODM vendor
. Hon Hai, with its unique EMS model, has achieved a 50% CAGR in sales over the past 10 years, and the company has the potential to do the same
. If the ODM business can be successfully carried out, the company's EMS business outlook will be more optimistic.
Chen Meifeng pointed out that the company's magnetic head business will enter a sustained growth track next year. In the next few years, global shipments of hard
disks will grow steadily, and the negative impact of Maxtor's acquisition by Seagate on the company's magnetic head business will be eliminated step by step from next year onwards
. With the release of Seagate's orders and the rapid growth of Maxtor's hard disk shipments, the company's magnetic head
business is expected to enter a sustained growth track from next year.
Chen Meifeng said the company's branded products to a new level. Italy ENEL's new meter project will
make the company's 2007 meter sales doubled, Italy and India outside the market development and ODM business
will make the company's meter business volatility is reduced, to achieve sustained and steady growth; in addition, the company's tax-controlled cash register business
business competitive advantage is obvious, it is expected that the company's tax-controlled cash registers will be shipped from the second half of next year, and is expected to become a major player in the tax-controlled cash register business. In addition, the company's tax-controlled cash register business has obvious competitive advantages.
●2006-11-24 Great Wall Development: Looking for the Chinese Giant of EMS (Hexun.com)
Great Wall Development (000021) Starting from 2007, the company's magnetic head business is expected to return to growth, and the electric meter business and
tax-controlled cash register business will also take a new step forward, and the sustained growth of the participating companies' performance and the possible IPO can make the company
The company's shares will be reorganized to provide a more competitive advantage. We expect the company's EPS from 2006
to 2008 will be 0.39 yuan, 0.50 yuan and 0.65 yuan respectively. Based on the results of DCF, PE and business valuation, we forecast a reasonable range of 9.14 yuan to 11.70 yuan, and set a 6-month target price of 10.50 yuan. We are optimistic about the company's medium- to long-term growth, although short-term results may depress the stock price. With 39% upside from our current price target, we would rate the stock a buy for the first time
.
Long-term positioning as an EMS/ODM player. We believe the company's easy-to-replicate model, low capital investment, large customer
effects and sufficient cash reserves will enable the company's EMS business to achieve sustained rapid growth. In the long run, the company can be positioned
as a specialized EMS/ODM manufacturer. Hon Hai's unique EMS model has resulted in a 50% CAGR in sales over the past 10 years
and we believe the company has the potential to do so. If the ODM business is successfully developed, the outlook for the company's EMS business
will be even more optimistic.
The magnetic head business will enter a sustained growth track next year. Global hard disk shipments will grow steadily in the next few years
. The negative impact of Maxtor's acquisition by Seagate on the company's magnetic head business will be gradually eliminated starting next year. With the release of Seagate's orders and the rapid growth of Maxtor's hard disk shipments, the company's magnetic head business is expected to enter a sustained growth track from next year onwards
.
Branded products have reached a new level. The new meter project of Italy ENEL will double the sales of meters in 2007, and the development of markets other than Italy and India and the development of ODM business will reduce the volatility of the company's meter business
and realize stable and sustainable growth. In addition, the company's tax-controlled cash register business has obvious competitive advantages.
It is expected that the company's tax-controlled cash registers will start shipping from the second half of next year, which is expected to become the company's new profit growth point.
Participating companies revaluation to provide valuation support. The participating companies will continue to grow rapidly in the next few years, and are likely to realize IPO, which will support the valuation of the Great Wall Development
.
Key uncertainties. Gross margins on Seagate's magnetic head orders may be lower than expected; RMB appreciation will reduce profits
Investment highlights
Unlike the market, which has positioned the company as a magnetic head maker, we believe that the company's successful experience cultivated in the magnetic head business can be replicated in its EMS business.
The company's EMS business is poised for continued rapid growth. The company's EMS business will usher in a period of sustained rapid growth, and in the long term
the company can be positioned as a specialized EMS/ODM vendor, which will open up its valuation space. The release of Seagate's orders
and the continued growth of Eltor's orders will enable the company's magnetic head business to enter a new growth trajectory from 2007, and the business of electric meters and
tax-control cash registers will also take a new step forward from 2007, while the rapid earnings growth of the companies in which the company is involved and the possible IPO will lead to a revaluation of the company's holdings.
We believe that the negative impact of the acquisition of Maxtor on the company is gradually eliminated, and in the medium to long term, the company's business
performance has the ability to sustained growth, so the first time to give a "buy" investment rating.
Valuation analysis
We predict that the Great Wall Development 2006 and 2007 EPS will be 0.39 yuan and 0.50 yuan, respectively, the next five years, the average annual compound growth rate of net
profit is about 20%. Combining the following three valuation methods, we believe that the reasonable range of Great Wall Development's share
price is RMB9.14 to RMB11.70: (1) According to the Haitong DCF model, taking the WACC of 8.5% to 9.5%
, and the perpetual growth rate of 0.5% to 1.5%, the reasonable range of Great Wall Development's share price is RMB9.70 to RMB11.70. (2)
Referring to the valuation of HSA vendors and EMS vendors, the reasonable range of Great Wall's share price is RMB9.50 to RMB10.50 based on the 2007 EPS of 19 to 21 times.
Reference to the valuation of HSA vendors and EMS vendors. (3) The valuation by business shows that the reasonable range of the company's stock price is from 9.14 yuan to
11.17 yuan.
●2006-09-21 Great Wall system companies all included in the letter group (Shanghai Securities News)
G Great Wall, G deep technology, G * ST information today the company issued a change in the actual controller announcement that the company today
Day to receive the actual controller of the Great Wall of China Computer Group Corporation notification by the State Council State-owned Assets Supervision and Administration Office of the State-owned Assets Supervision and Administration Office of the State-owned Assets Supervision and Administration Office of the State-owned Assets Supervision and Administration of the State-owned Assets Supervision and Administration of the State-owned Assets Supervision and Administration Office reform
200665, the Great Wall Group, as a wholly-owned
subsidiary of China Electronics Corporation (CEC), was reorganized. The Great Wall Group has applied to the State Administration for Industry and Commerce for the change of contributors and has received confirmation of the approval, i.e., the contributor of the Great Wall Group has been changed to CEC, and the de facto
controller of the three companies has been changed to CEC.
It is reported that CITIC Group is a large centralized enterprise with a registered capital of RMB 5.734 billion, which is mainly engaged in IC design
design and production, software and system integration services, as well as the research and development and production of communication products.
The Great Wall Group has been acquired by CITIC Group as early as last year, and the Great Wall companies had collectively
announced in August 2005 that the State-owned Assets Supervision and Administration Commission (SASAC) had approved a joint reorganization of CITIC and Great Wall Group, and that the Great Wall Group was merged into CITIC Group
. After the reorganization, the Great Wall Group will be abolished. At present, the two groups are studying and formulating specific reorganization plans
. After the reorganization of the group's personnel arrangements and other important matters will be decided by the State Council
SASAC, the higher authority of the two groups.