Foton Motor (600166): Repurchase Highlights Confidence, Focuses on Fighting Again

Foton Motor (600166): Repurchase Highlights Confidence, Focuses on Fighting Again
Event: The company recently announced that it will repurchase shares through a centralized bidding transaction, and the planned repurchase amount is 2.Between 5 ppm and 5 ppm, the proposed repurchase price does not exceed RMB 2.55 yuan / share. The repurchase time is within 12 months from the date when the scale of the shareholders’ meeting passes the repurchase plan. Repurchases demonstrate confidence, and fair incentives promote landing.Based on the confidence in the company’s future sustainable development and recognition of the company’s future value, the company intends to use its own funds for share repurchases. The maximum amount of repurchase funds is RMB 500 million, and the price of the repurchased shares does not exceed 2.It is estimated at 55 yuan / share that the number of shares repurchased this time is estimated to be 196,078,431 shares, accounting for the total issued share capital of the company.94%.70% of the total number of shares actually repurchased this time will be used to supplement and reduce registered capital, and 30% will be used for subsequent employee stock ownership plans and equity incentive plans. The implementation of the equity incentive plan will further stimulate the company’s employees’ initiative andMotivation is conducive to the company’s long-term development. Bao Wo welcomes a new owner, and its performance will greatly reduce losses.In January 2019, the company took 39.7.3 billion pounds completed the transfer of 67% of Baowo Automobile. The new owner of Baowo Shenzhou UCAR will also cooperate with Foton and Baowo to promote a new retail platform. In the future, it will become more integrated to create a connected car + new retail smart car platform.The company has acquired Baowo and tried to deploy the passenger car field. After going through bumps, the market side is under pressure. In 2018, the Baowo segment is expected to exceed 2 billion US dollars, which obviously drags down the company’s overall performance.With the new main gradually entering and taking over Baowo Automobile, the subsequent expansion will also be undertaken by new strategic investors. In 2019, the company’s business in this sector will achieve a substantial reduction in losses, and promote the company’s performance to stabilize or change. Refocusing on the main business, the former commercial vehicle leader set off again.Subsequent companies will refocus on the main business and focus on making the commercial vehicle sector bigger and stronger.The company has been the leading player in the domestic commercial vehicle industry. Its affiliates, such as Auman, Omarco, Aoling, and Time, still have influence. The cumulative sales volume in the truck industry has ranked first in the industry for more than 10 consecutive years.Le and Cummins 淡水桑拿网 have the world’s leading technological strength. With the accumulation of time and experience, Cummins engines will further adapt to the domestic market and complete the upgrade of technical parameters.The overall strength of the commercial vehicle segment is still leading. In the past, the company has continued to make efforts after the company’s strategic refocusing in the areas of strength in the past, entering the company’s return to its peak era. Investment suggestion: Considering that the unfavorable factors in 2018 have been fully reflected, the performance has bottomed out, and Bao Wo’s business will also significantly reduce losses. After refocusing on the commercial vehicle sector in the strengths, it will gradually rebuild its former glory, and the performance will also usher in stabilization or reversal.It is estimated that the net profit in 18/19 will be -3.2 billion / 500 million respectively, and the current PB is still less than 1, giving a “Buy” rating. Risk warning: The progress of repurchase and fair incentives is not up to expectations, and commercial vehicle sales are lower than expected.