Less than a hundred days after listing, Yangzhou Jinquan (603307) began planning its first merger and acquisition after listing. The manufacturer of outdoor products, whose customer base includes first-tier brands such as TheNorthFace (North Face), announced that it is planning to acquire a 50.5% stake in Jiangsu Acom Camping Products Co., Ltd. (“Acom”) to enrich the company’s tents category.
Acquired 50.5% equity of Acom
At present, Yangzhou Jinquan has signed a framework agreement with equity transfer parties Wan Congrong and Shi Cuihong. The parties agreed that this transaction will be carried out in cash; the estimated value of 100% of Accomm’s equity should not exceed 9.5 times its audited net profit in 2022 after deduction of non-exchanges. At the same time, Wan Congrong, the current legal representative, executive director and general manager of Acom, should continue to work in Acom within three years.
According to Yangzhou Jinquan, Acom is a professional manufacturer of outdoor products. Its main products are inflatable tents, sleeping bags, outdoor clothing, etc., which are mainly sold to markets such as Europe and the United States. Currently, Wan Congrong and Shi Cuihong jointly hold 100% of the shares of Accom.
Accom’s unaudited financial data shows that the company’s total assets by the end of 2022 will be 395 million yuan, net assets will be 178 million yuan, operating income in 2022 will be 549 million yuan, and net profit will be 75.6 million yuan. As a comparison, Yangzhou Jinquan achieved an operating income of 1.128 billion yuan in 2022 and a net profit of 239 million yuan. The current price-earnings ratio is 14.6 times.
Yangzhou Jinquan said that if the acquisition of this equity is completed, it will help the company master the resources of talents, technology, market and other inflatable tents, which will help enrich the categories of the company’s tents and further enhance the company’s market share and competitiveness.
The announcement information does not specify whether Yangzhou Jinquan will realize the controlling stake in Acom after the completion of the transaction. Yangzhou Jinquan only emphasized that this transaction does not constitute a related transaction, nor is it expected to constitute a major asset restructuring. The framework agreement signed this time is only the initial acquisition intention reached by the company and the counterparty, and there is still uncertainty about whether this transaction can be concluded. .
Mergers and acquisitions in the same industry increase tent products
This transaction is a horizontal M&A for Yangzhou Jinquan, and the business forms of Acom and Yangzhou Jinquan are highly similar.
Yangzhou Jinquan, which was launched in February this year, mainly provides high-quality outdoor products for global customers through the ODM/OEM (both OEM production mode, of which the latter adds design links). The main brands of the client include Coleman (Coleman), North Face, Fjallraven (Swedish Arctic Fox) and other international first-line outdoor sports brands. Like Acom, Yangzhou Jinquan is also an export-oriented enterprise, and more than 90% of the company’s exports are to overseas countries and regions such as Europe and North America.
Yangzhou Jinquan and Accom are not even geographically far apart. Both companies are registered in Hanjiang District, Yangzhou City. The estimated time to drive to and from the two places is less than 20 minutes. The similar geographical relationship and the fact that Wan Congrong, the controlling shareholder of Accom, has promised to stay in office, may provide a better foundation for post-acquisition integration.
In this transaction, the tent product emphasized by Yangzhou Jinquan is a star product in the booming outdoor product market. Taking Yangzhou Jinquan as an example, the company’s tent product revenue in 2022 will be 587 million yuan, which is the company’s largest category; revenue has increased by 89.9% year-on-year, leading all product lines. At the same time, the 28.24% gross profit rate of tent products is also among the best in all product lines.
Yangzhou Jinquan has continued to increase the production and R & D strength of tent products before. The highlight of the company’s IPO fundraising project is the construction of a technical transformation project for a production line with an annual output of 250,000 tents. At the same time, the research and development of inflatable support tents is also one of the research and development priorities of Yangzhou Jinquan. It is reported that tents supported by inflatable columns can reduce the use of tent support metal poles, and achieve the purpose of light portability, fast inflation, and convenient storage.
Interestingly, the stock price of Yangzhou Jinquan reached its daily limit last Friday, which is the second time since the company’s initial stock price limit ended. It is generally interpreted in the market as the business recovery of the textile and garment sector has been approved by funds.