Guojin Securities: Issue a Buy rating for Yutong Technology

Guojin Securities Co., Ltd. Zhao Zhongping recently conducted research on Yutong Technology and published a research report titled “Expanding into Europe & Acquiring Huayan to Improve AI Industry Chain Layout, Moving Towards Broad Growth Space of 1+N+T Growth Stocks,” giving Yutong Technology a “Buy” rating.

Yutong Technology (002831)

Event Summary

On the evening of February 25, the company announced that its wholly-owned subsidiary, Hong Kong Yutong, acquired a 60% stake in the Hungarian packaging company Gelbert for 6.5437 million euros (approximately 53.48 million RMB), officially entering the core European market.

Operational Analysis

The acquisition price corresponds to 6.4 times the target company’s 2024 EBITDA, indicating a relatively low valuation. Through this acquisition, the company can leverage Gelbert’s established customer network and market reputation in Hungary and Central and Eastern Europe to quickly establish localized production and delivery capabilities in Europe, shorten supply chain response cycles, directly serve local customers, and enhance localized service stickiness and order acquisition ability.

On February 10, the company announced plans to acquire a 51% stake in Dongguan Huayan Technology for 449 million RMB. Founded in 2016, Huayan Technology specializes in the R&D and manufacturing of precision metal/ceramic components, widely used in consumer electronics, automotive manufacturing, medical devices, communication equipment, tools, and locks. The acquisition agreement also stipulates that Huayan Technology’s target net profits (excluding extraordinary items) for 2026-2028 are 0.75/1.00/1.55 billion RMB, respectively; if these targets are not met, the difference will be paid accordingly. If the actual net profit exceeds the target by more than 120%, the overall valuation will be adjusted to the actual net profit multiplied by 10 times PE, but the maximum valuation will not exceed 1.32 billion RMB. Yutong will additionally pay the difference resulting from the valuation adjustment in share transfer payments.

The overall valuation for acquiring Huayan Technology is 880 million RMB, at 8 times the average target net profit (excluding extraordinary items) for 2026-2028, indicating a relatively low valuation and reflecting strong support from major shareholders for asset injection. Completing the acquisition of Huayan Technology will directly boost the company’s overall performance. Additionally, Huayan Technology’s precision manufacturing capabilities will help Yutong penetrate core customer supply chains for key components, transitioning from peripheral supporting roles to core supply.

The company is focused on the 1+N+T strategy. Building on previous acquisitions of Huabali, Renhe, and strategic investments in Longqi Technology, this acquisition of Huayan Technology continues the expansion into non-packaging fields. It strengthens supply chain integration and service capabilities based on its main packaging business, with potential to develop more core clients in AI and trendy new consumer sectors, further expanding overall growth potential. The company is gradually shifting from growth dividends to a 1+N+T growth stock, with performance expected to gradually exceed expectations.

Profit Forecast, Valuation, and Rating

We forecast the company’s EPS for 2025-2027 to be 1.78/1.93/2.30 RMB, respectively. The current stock price corresponds to PE ratios of 18/16/14 times, maintaining a “Buy” rating.

Risk Warning

Poor development of new businesses; overseas capacity deployment below expectations; RMB exchange rate fluctuations.

Latest profit forecast details are as follows:

In the past 90 days, 7 institutions have issued ratings for this stock, with 6 recommending “Buy” and 1 recommending “Hold”; the average target price among institutions over the past 90 days is 31.35 RMB.

The above content is compiled by Securities Star based on public information, generated by AI algorithms (Wangxin Algorithm Backup 310104345710301240019), and does not constitute investment advice.