List of high-quality authors [Market hotspots] On the last trading day of 2023 (December 29), BYD (002594) and its subsidiary BYD Electronics (1211HK) announced the completion of its largest acquisition in history.
According to the announcement, BYD Electronics finally acquired JABIL IncThe price for Jabil Singapore's mobile electronics manufacturing business, which manufactures consumer electronics components (target company "Juno Newco"), is $142900 million yuan, 1.3 billion yuan less than the original purchase price of 15.8 billion yuan (2.2 billion US dollars equivalent).
Since it is a cash acquisition, this requires a large amount of capital. By the end of June 2023, BYD Electronics has total assets of about 59.7 billion yuan and net assets of 26.8 billion yuan, but only 7.2 billion yuan of cash on its books, so it needs to borrow from its parent company BYD to raise funds.
BYD, the leader of electric vehicles, holds 65% of BYD Electronics8%, close to 2 3, BYD founder Wang Chuanfu also serves as the chairman of BYD Electronics at the same time, and the palms and backs of his hands are meat. BYD will provide a shareholder loan for the acquisition of its holding company, BYD Electronics, which was originally acquired at 15.8 billion yuan, with a loan principal amount of about 15.4 billion yuan (equivalent to 2.1 billion$500 million), and now it is estimated that a loan of 14 billion yuan is needed, with a loan term of 1 year.
All are listed companies, accountable to all shareholders, and the loan is subject to interest, which is based on a 68 basis point increase in the one-year guaranteed overnight financing rate (SOFR) based on the drawdown date agreed in the loan agreement.
The author looks up the relevant data, and the SOFR in the United States is relatively high, more than 5%;The domestic SOFR is lower, or around 2%, and the overall lending rate is estimated to be at 2About 5%, this capital cost is still relatively cheap. BYD Electronics needs to pay about 400 million yuan in interest a year, and its interest expense last year was only about 0600 million yuan, which will be greatly increased in 2024.
Of course, Juno Newco itself is also well-qualified, with revenue of 42 in the most recent fiscal year (September 2021 to August 2022).$600 million, net profit of 1$4.3 billion;From September 2022 to May 2023, a total of 9 months, the revenue was 34$300 million, net profit of 10.7 billion US dollars. However, total assets decreased by 4US$700 million may be an important reason for the final purchase price reduction.
BYD Electronics will complete the acquisition at the end of 2023, Juno Newco's revenue will be consolidated in 2024, and all profits will be attributed to BYD Electronics, which is enough to pay the interest on the acquisition.
However, after a year, this shareholder loan will eventually have to be repaid, and if Juno Newco's cash flow is insufficient to pay for the acquisition, BYD Electronics is expected to extend the loan or raise funds through refinancing to repay the loan.
From 2020 to the first half of 2023, BYD's net cash flow from electronic financing activities was 15700 million yuan, -3.2 billion yuan, 17600 million yuan and 7900 million yuan, with a total net inflow of about 9200 million yuan, for the acquisition of 14.3 billion yuan, a large amount of financing will be opened. From the perspective of the capital market, raising funds to acquire assets is also a routine operation.
BYD Electronics will achieve revenue of 107.9 billion yuan in 2022, a year-on-year increase of 205%, but net profit 18600 million yuan, a decrease of about 196%；In the first half of 2023, both revenue and profit will achieve double-digit growth, sweeping away the dilemma of continuous decline in profits in 2021 and 2022.
The completion of the acquisition of Juno Newco will effectively increase the profits of BYD Electronics. BYD Electronics' latest market capitalization is HK$82.5 billion, with a price-to-earnings ratio (TTM) of about 28 times, which is about 40% higher than the 20 times P/E ratio of its parent company, BYD.