China

Rongyu Group Plans to Buy Out Chinese Online Marketing Firm Guangzhou Junbo to Enter IT Industry

Summary:

  • Rongyu Group Co., Ltd. (002622.SZ) recently announced plans to buy out Guangzhou Junbo Network Technology Inc., as reported by CNFOL.
  • Rongyu Group plans to finance the acquisition in cash.
  • The transaction price is currently estimated to be RMB 975 million, but this has not been finally settled.

Why It Matters:

  • Founded in 2012, Guangzhou Junbo is mainly engaged in online marketing services. The company went public on China‘s New Third Board in December 2015 with a code of 835103. The company promises to generate net profits of no less than RMB 75 million, RMB 97.5 million, and RMB 127 million respectively for 2017, 2018, and 2019.
  • At the end of 2016 when the company conducted its latest private offering, Guangzhou Junbo’s valuation was RMB 480 million. The current estimated buyout price of RMB 975 million represents a 103% premium over that valuation.
  • Rongyu Group is principally engaged in the research and development, manufacture, and distribution of electrical switch products. The company’s net profit for 2016 dropped 82.66% from the previous year to RMB 15.67 million. Rongyu expects to enter the IT industry through the acquisition.