Yangjie Technology(SZ:300373)2025-09-18 13:09Summary of Yangjie Technology Conference Call Company Overview - Company: Yangjie Technology (300373.SZ) - Industry: Semiconductors, specifically focusing on fuses and overcurrent protection Key Points Acquisition of Better Fuse - Yangjie Technology plans to acquire 100% of Better Fuse for a total of Rmb2,218 million, which includes Rmb1,432 million for 55.8% from Dongguan Beiju and Rmb786 million for the remaining 44.2% from other shareholders [2][3] - Dongguan Beiju will reinvest Rmb716 million into Yangjie shares, aligning management interests [2] - Better Fuse's management has committed to achieving a total net profit of Rmb555 million over 2025-2027 [2] Strategic Rationale for Acquisition - The acquisition is expected to enhance Yangjie's revenue mix from the automotive sector, targeting a 30% auto revenue mix by 2030 [3][15] - Better Fuse has approximately 20% revenue exposure to the automotive sector, which overlaps significantly with Yangjie's customer base [3][15] - The acquisition is anticipated to facilitate cross-selling opportunities and expand Better Fuse's overseas customer base [3][15] Financial Projections and Performance - Yangjie expects Better Fuse to generate Rmb1.15 billion in revenue and Rmb200 million in net profit by 2027 [4] - The acquisition is projected to add approximately Rmb1 billion in revenue by 2027 [9] - Yangjie has raised its price target to Rmb80, reflecting an increase in EPS forecasts for 2025, 2026, and 2027 by 6%, 11%, and 21% respectively [5][20] Market Position and Competitive Landscape - The competitive landscape for fuses and overcurrent protection is viewed as more favorable compared to power discrete markets, which should enhance profitability [4][13] - Better Fuse is expected to maintain a gross margin of around 40%, which is higher than Yangjie's current margins [17] Financial Metrics - Yangjie's revenue projections for 2025, 2026, and 2027 are Rmb7,396 million, Rmb8,831 million, and Rmb10,422 million respectively [26] - The company anticipates an operating margin improvement, with projections of 19.5% in 2025 and 24.1% in 2027 [21][26] - EPS is expected to grow from Rmb2.37 in 2025 to Rmb4.06 in 2027 [21][26] Valuation and Investment Thesis - The stock is currently trading at 21x 2026 estimated EPS, below the 5-year average of 26x, indicating potential for upside [5] - The investment thesis is supported by expected synergies from the acquisition, improved operational efficiencies, and a favorable market outlook for the semiconductor industry [30][31] Risks and Considerations - Potential risks include market volatility, integration challenges post-acquisition, and reliance on the automotive sector's performance [30][31] Conclusion - The acquisition of Better Fuse is positioned as a strategic move to enhance Yangjie Technology's market presence, revenue diversification, and profitability, with optimistic financial projections supporting the investment case.