KSS capital increase from Joyson and strategic investor。    Joyson announced after market close on 3November that the company enteredan agreement with an external investor, SDIC (State Development & InvestmentCorp.) Fund Management regarding the capital increase in Joyson's auto safetysubsidiary KSS. Joyson and SDIC Fund will invest USD150m and USD250m,respectively, in KSS (for a total amount of USD400m) for auto safety businessexpansion, global M&As and working capital. Following the capital increase,Joyson's stake in KSS will decrease to 84.85% from 100% previously and SDICFund will take the rest 15.15% stake in KSS.。    Joyson acquired KSS in June 2016and the business recorded close to USD5bnnew orders last year. According to the announcement, KSS reported RMB12.1bnrevenue (+22.2% YoY) and RMB398.8m net profit (+77.1% YoY) in 2016.。    Deutsche Bank view - overhang on acquisition funding removed。    Earlier in June this year, Joyson announced that KSS had signed an MOU withTakata to buy Takata's non-PSAN business for not more than USD1.6bn, includingUSD350m in cash. We believe the USD400m capital increase will ease investors'concern on the funding source for Takata air bag business acquisition. MaintainBuy on our optimistic view for the growth potential of KSS in active safety andADAS market in China. In 3Q17, Joyson said KSS recorded new contract wins foractive safety products.。    Our TP is set at 30x FY18E P/E (unchanged), ~15% below its mid-cycle P/E of 36x.This is justified, in our view, since we expect the company to deliver a 37.5% EPSCAGR in FY16-19E. Key downside risks: 1) weaker-than-expected auto sales; 2)failure to consolidate KSS/TS or improve profitability; 3) future capital raising tofund potential acquisitions.。

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。