SongYang(603863) 东吴证券·2024-05-24 03:30Investment Rating - The report maintains a "Buy" rating for the company, expecting a relative performance increase of 5% to 15% over the next six months [9][31]. Core Views - The acquisition of a 51% stake in Furong Gaoke by the company's wholly-owned subsidiary, Ledong Technology, will allow the company to consolidate Jinling Le Cai into its financial statements, enhancing its profit through video lottery operations [2][25]. - The company's net profit forecasts for 2024 and 2025 have been adjusted upwards to 0.2 billion and 0.7 billion respectively, with a new forecast of 1.0 billion for 2026, reflecting the anticipated benefits from the acquisition [18]. Financial Forecasts and Valuation - Total revenue is projected to increase from 665.36 million in 2023 to 1,314.58 million by 2026, with a year-on-year growth rate of 56.17% in 2024 and 12.61% in 2026 [1]. - The company is expected to turn a profit in 2024 with a net profit of 22.38 million, growing to 99.60 million by 2026, indicating a significant recovery from previous losses [1]. - The latest diluted EPS is forecasted to improve from (1.16) in 2023 to 0.49 in 2026, reflecting the company's recovery trajectory [1]. Acquisition Details - The acquisition includes performance commitments, with the target company promising net profits of no less than 9 million, 18.15 million, 24.46 million, and 35.73 million from 2025 to 2028 [10]. - The first payment of 8.2875 million will be made in cash, representing 10% of the total transaction value, with the remaining payments contingent on meeting performance targets [10]. Market Position - The company is positioned to leverage the operational capabilities of Jinling Le Cai, which is the operator of video lottery services in Hainan, enhancing its competitive edge in the market [25].