Cotran New Material's Shares Gain by Limit on Plan to Buy Core Huawei Supplier
Liao Shumin
DATE:  Oct 25 2019
/ SOURCE:  yicai
Cotran New Material's Shares Gain by Limit on Plan to Buy Core Huawei Supplier Cotran New Material's Shares Gain by Limit on Plan to Buy Core Huawei Supplier

(Yicai Global) Oct. 24 -- Cotran New Material's shares rose by the daily trading limit after the rubber sealant materials maker announced its intention to buy all of Dongchuang Precision Technology, a main supplier to Chinese tech titan Huawei Technologies.

The Shenzhen-based company's stock price [SHE:300731] jumped 10 percent when it resumed trading today to close at CNY24.90 (USD3.52).

Cotran New Material will acquire Dongchuang Precision from its 11 owners at a cost of CNY600 million (USD84.9 million) in new shares and cash, and make it a wholly owned subsidiary, the buyer said in a statement late yesterday. 

Dongchuang Precision is Huawei's core supplier and ZTE's major supplier. The firm can mass-produce injection-molded structural parts such as antenna housings and elements for the fifth-generation network base stations that it develops, designs and produces for Huawei and has a significant lead in the field.

It will be included in Cotran's earnings after the acquisition, the statement said, adding that Dongchuang Precision will enhance its 5G business, increase its scale and boost profit.

The two sides also signed a profit forecast compensation deal for the acquisition, agreeing that Dongchuang Precision will achieve net profit of at least CNY55 million, CNY66 million and CNY79.2 million after deducting non-recurring gains and losses in 2020, 2021 and 2022.

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Keywords:   Cotran New Material,Huawei