China Outbound Smart Meters Sector Preview

Chinese smart meters companies have been seeking to transform into integrated energy services providers amid the country's push to develop a smart and eco-friendly power system.

With the help of sensing, IoT, and big data technologies, smart meters are playing a more important role in ensuring a stable and safe power supply, especially in cases of natural disasters and epidemics. In order to offset the economic impact of the COVID-19 disease and ensure sustainable growth, the Chinese government is eyeing over CNY 40 trillion "new infrastructure" projects starting from this March. "New infrastructure" includes digital and telecom infrastructure such as 5G networks, inter-city transit systems, vehicle charging stations, data centers, as well as smart energy and smart city projects.

Different from the old-fashioned ways of building bridges and roads, the shift aims to support high-tech manufacturing, revitalize industrial supply chains, and boost consumption. These actions are expected to strongly drive demands for intelligent products, while requiring domestic smart meters players to extend services and increase technology know-how by strengthening their supply chain and cost management, as well as accelerate digitalization and innovation.

Besides consolidation of domestic peers, Chinese smart meters manufacturers are seeking diversification into electricity IoT, clouding, power charging, energy storage, sensing and semiconductor-related areas, according to recent announcements. Such services could extend from projects construction to energy generation, transmission, monitoring, as well as energy storage and saving. They also aim to increase their overseas presence via new business development, setting up overseas subsidiaries, co-operations with energy companies, and M&A.

They have major presence in the European, Southeast Asian and Middle Eastern countries including the Netherlands, Italy, Spain, Portugal, Germany, Vietnam, Singapore and Saudi Arabia for smart meters businesses. For energy services, their current focuses are on the Belt & Road regions. During the past five years, Chinese buyers have made 84 acquisitions with combined deal value of USD 27bn of energy-related targets in the Belt & Road regions, according to Mergermarket data.

Chinese smart meter-sector buyers interested in overseas acquisitions

CompanyMarket Cap (CNY/m)Products/Services other than smart meters manufacturingSponsorLegal advisor
ShenZhen Clou Electronices [SHE:002121]5,816.5Power systems and power distribution services; power automation productsIndustrial SecuritiesGrandway Law Offices
Ningbo Sanxing Medical Electric [SHA:601567]10,662.7Power distribution terminals, transformers and switches; Construction, operation, and leasing of hospitalsCiti Orient SecuritiesAllBright Law Offices
Hexing Electrical [SHA:603556]7,439.4Overall solutions for power distribution, power cloud services, construction and operation of power grid infrastructureCICCGrandall Law Firm
Hangzhou Sunrise Technology [SHE:300360]4,671.4Power information collection system products, including and distribution transformer acquisition terminals, concentrators, softwareHaitong SecuritiesAllBright Law Offices
Jiangsu Linyang Energy [SHA:601222]9,667.2Collectors, concentrators, power selling terminals and bidirectional converters; operation of photovoltaic power stations; manufacture and sales of monocrystal photovoltaic modules and LED productsGF SecuritiesGrandall Law Firm
ShiJiaZhuang Kelin Electric [SHA:603050]2,459.3Electricity substation, electricity distribution and electricity utility equipment; photovoltaic distributed generation equipmentSoochow SecuritiesDeHeng Law Offices
Integrated Electronic Systems Lab [SHE:002339]4,052.2Power grid automation, electricity distribution automation, software; system integration of power generation plant automation equipment and systemZhongshan SecuritiesDeHeng Law Offices

Strategic focus of the selected Chinese smart meter-sector players

Company NameTarget FocusesIn the ways ofRationale
ShenZhen Clou ElectronicesAssets related to energy generation, transmission, distribution, monitoring and storageM&ATo extend services
 IoT and cloud servicesIncrease investments, co-operations, M&ATo help increase overseas presence with focuses on Australia, Africa, India and Southeast Asia
Assets related to new energy microgrid, energy storage power station, new energy vehicles, and comprehensive energy servicesM&A fundTo diversify
Ningbo Sanxing Medical ElectricDiversification into charging pile, photovoltaic box transformer, wind transformerIncrease investmentsTo boost sales and meet client's needs amid energy sector's transformation
Local manufacturers in the B&R regionsAcquisitions, co-operations, or setting up overseas subsidiariesTo help increase overseas presence
Assets in such fields as rehabilitation, the maternal and child health, physical examination centerM&ATo extend healthcare services
Hexing ElectricalIoT and intelligent productIncrease investmentsTo upgrade services and reduce costs
Meter manufacturing, system integration, and power engineeringBusiness extensionTo provide full energy services
Electric metering products manufacturers with focuses in the B&R regionsM&ATo increase overseas presence
Hangzhou Sunrise TechnologyDiversifications into IoT and cloud servicesM&ATo extend services covering energy monitoring, maintenance, and comprehensive energy saving
Assets in such fields as public energy measurement, Internet, environmental protection, information technology, and high-end equipment manufacturingM&A fundTo upgrade its technologies, improve profitability, and diversify its business
Jiangsu Linyang EnergySmart meter assetsSeeks new business development, co-operations with energy companies, and M&ATo increase overseas presence
Smart electrical meters; electricity management solutionsJoint venture partners in Europe and Southeast AsiaCo-develop the meter business
Diversification of up/downstream assetsM&A fundTo help its transformation to provide complete energy services
ShiJiaZhuang Kelin ElectricSales companies in the B&R regionsCo-operations, M&ATo increase overseas presence and boost sales
Assets related to mobile Internet, cloud computing, big data, IoTIncrease investmentsTo increase technology reserves and push new business/products development
Electric equipment with tech focusesM&AConsolidate to increase market shares
Integrated Electronic Systems LabUltrasonic smart metersIncrease investmentsTo increase overseas presence
Energy management, new materialsIncrease investmentsTo boost sales and new business development

Financials of  the selected Chinese smart meter players

Company NameRevenue (CNY/m; Q1-Q3 2019)YoY growth% from Overseas BusinessROEEV/EBITDA multipleReceivables TurnoverCashNet debt
ShenZhen Clou Electronices2,340.9-21.3%9.7%-5.7%29.7x1.051,071.63,623.1
Ningbo Sanxing Medical Electric4,864.115.5%11%10.5%12.5x2.621,655.91,737.8
Hexing Electrical1,990.18.2%67.8%7.4%14.1x1.682,694.2(2,200.9)
Hangzhou Sunrise Technology892.22.3%12.1%7%22.9x1.581,455.4(1,455.4)
Jiangsu Linyang Energy2,545.6-7.2%6.6%7.2%14.1x0.861,596.84,228.4
ShiJiaZhuang Kelin Electric814.612.7%0.5%4%56.1x1.12257.69.8
Integrated Electronic Systems Lab977.7-16.7%0.0%-1.6%231.9x0.75476.3207.3

Potential European Targets in the IoT, Semiconductor, and New energy-related Spaces

CompanyCompany descriptionFinancialsNotes
Huba Control (Switzerland)Manufacturer of components for pressure and flow measurementEBITDA: CHF 20mSiemens explores sale of Huba with Lazard advising
Corvallis (Italy)Provider of IoT and data intelligence servicesEBITDA: EUR 10mCorvallis back to market with tech unit sale, Banca Imi and Klecha advising
GreenCom Networks (Germany)Provider of IoT-based sustainability energy management serviceNumber of employees: 60Seeks to raise at least EUR 20m to develop hardware and sales channel
PAIX (Netherlands)Provider of data center servicesRevenue: USD 1mSeeking to raise USD 24m for data center construction
CDQ (Switzerland)Operator of data management solutions provider and cloud platformForecasted revenue: CHF 1.7mSeeking to raise around CHF 20m by 2021 to expand its operations to Northern Europe, North America and Asia
SRT (Russia)Developer of electronic sensors and network technology solutionsRevenue: USD 5mSRT targets minimum USD 10m in equity-based fundraise strategy to drive business growth
Altix (France)Designer of automated production equipmentRevenue: EUR 15mHeld by French-PE firm Amundi Private Equity Funds for 21 months
One of a Kind Technologies (Netherlands)Provider of machine vision solutionsRevenue: EUR 8mHeld by Belgium-based PE firm Gimv for 21 months
Faure Herman (France)Manufacturer of helical turbine and ultrasonic flow meters for liquid measurementValuation: USD 22mHeld by French PE firm BNP Paribas Private Equity for 29 months
noventic (Germany)Provider of devices and systems for the consumption based collection and billing of water and heatNAHeld by UK-based PE firm Hg for 35 months

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