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
| Company | Market Cap (CNY/m) | Products/Services other than smart meters manufacturing | Sponsor | Legal advisor |
|---|---|---|---|---|
| ShenZhen Clou Electronices [SHE:002121] | 5,816.5 | Power systems and power distribution services; power automation products | Industrial Securities | Grandway Law Offices |
| Ningbo Sanxing Medical Electric [SHA:601567] | 10,662.7 | Power distribution terminals, transformers and switches; Construction, operation, and leasing of hospitals | Citi Orient Securities | AllBright Law Offices |
| Hexing Electrical [SHA:603556] | 7,439.4 | Overall solutions for power distribution, power cloud services, construction and operation of power grid infrastructure | CICC | Grandall Law Firm |
| Hangzhou Sunrise Technology [SHE:300360] | 4,671.4 | Power information collection system products, including and distribution transformer acquisition terminals, concentrators, software | Haitong Securities | AllBright Law Offices |
| Jiangsu Linyang Energy [SHA:601222] | 9,667.2 | Collectors, concentrators, power selling terminals and bidirectional converters; operation of photovoltaic power stations; manufacture and sales of monocrystal photovoltaic modules and LED products | GF Securities | Grandall Law Firm |
| ShiJiaZhuang Kelin Electric [SHA:603050] | 2,459.3 | Electricity substation, electricity distribution and electricity utility equipment; photovoltaic distributed generation equipment | Soochow Securities | DeHeng Law Offices |
| Integrated Electronic Systems Lab [SHE:002339] | 4,052.2 | Power grid automation, electricity distribution automation, software; system integration of power generation plant automation equipment and system | Zhongshan Securities | DeHeng Law Offices |
Strategic focus of the selected Chinese smart meter-sector players
| Company Name | Target Focuses | In the ways of | Rationale |
|---|---|---|---|
| ShenZhen Clou Electronices | Assets related to energy generation, transmission, distribution, monitoring and storage | M&A | To extend services |
| IoT and cloud services | Increase investments, co-operations, M&A | To 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 services | M&A fund | To diversify | |
| Ningbo Sanxing Medical Electric | Diversification into charging pile, photovoltaic box transformer, wind transformer | Increase investments | To boost sales and meet client's needs amid energy sector's transformation |
| Local manufacturers in the B&R regions | Acquisitions, co-operations, or setting up overseas subsidiaries | To help increase overseas presence | |
| Assets in such fields as rehabilitation, the maternal and child health, physical examination center | M&A | To extend healthcare services | |
| Hexing Electrical | IoT and intelligent product | Increase investments | To upgrade services and reduce costs |
| Meter manufacturing, system integration, and power engineering | Business extension | To provide full energy services | |
| Electric metering products manufacturers with focuses in the B&R regions | M&A | To increase overseas presence | |
| Hangzhou Sunrise Technology | Diversifications into IoT and cloud services | M&A | To 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 manufacturing | M&A fund | To upgrade its technologies, improve profitability, and diversify its business | |
| Jiangsu Linyang Energy | Smart meter assets | Seeks new business development, co-operations with energy companies, and M&A | To increase overseas presence |
| Smart electrical meters; electricity management solutions | Joint venture partners in Europe and Southeast Asia | Co-develop the meter business | |
| Diversification of up/downstream assets | M&A fund | To help its transformation to provide complete energy services | |
| ShiJiaZhuang Kelin Electric | Sales companies in the B&R regions | Co-operations, M&A | To increase overseas presence and boost sales |
| Assets related to mobile Internet, cloud computing, big data, IoT | Increase investments | To increase technology reserves and push new business/products development | |
| Electric equipment with tech focuses | M&A | Consolidate to increase market shares | |
| Integrated Electronic Systems Lab | Ultrasonic smart meters | Increase investments | To increase overseas presence |
| Energy management, new materials | Increase investments | To boost sales and new business development |
Financials of the selected Chinese smart meter players
| Company Name | Revenue (CNY/m; Q1-Q3 2019) | YoY growth | % from Overseas Business | ROE | EV/EBITDA multiple | Receivables Turnover | Cash | Net debt |
|---|---|---|---|---|---|---|---|---|
| ShenZhen Clou Electronices | 2,340.9 | -21.3% | 9.7% | -5.7% | 29.7x | 1.05 | 1,071.6 | 3,623.1 |
| Ningbo Sanxing Medical Electric | 4,864.1 | 15.5% | 11% | 10.5% | 12.5x | 2.62 | 1,655.9 | 1,737.8 |
| Hexing Electrical | 1,990.1 | 8.2% | 67.8% | 7.4% | 14.1x | 1.68 | 2,694.2 | (2,200.9) |
| Hangzhou Sunrise Technology | 892.2 | 2.3% | 12.1% | 7% | 22.9x | 1.58 | 1,455.4 | (1,455.4) |
| Jiangsu Linyang Energy | 2,545.6 | -7.2% | 6.6% | 7.2% | 14.1x | 0.86 | 1,596.8 | 4,228.4 |
| ShiJiaZhuang Kelin Electric | 814.6 | 12.7% | 0.5% | 4% | 56.1x | 1.12 | 257.6 | 9.8 |
| Integrated Electronic Systems Lab | 977.7 | -16.7% | 0.0% | -1.6% | 231.9x | 0.75 | 476.3 | 207.3 |
Potential European Targets in the IoT, Semiconductor, and New energy-related Spaces
| Company | Company description | Financials | Notes |
|---|---|---|---|
| Huba Control (Switzerland) | Manufacturer of components for pressure and flow measurement | EBITDA: CHF 20m | Siemens explores sale of Huba with Lazard advising |
| Corvallis (Italy) | Provider of IoT and data intelligence services | EBITDA: EUR 10m | Corvallis back to market with tech unit sale, Banca Imi and Klecha advising |
| GreenCom Networks (Germany) | Provider of IoT-based sustainability energy management service | Number of employees: 60 | Seeks to raise at least EUR 20m to develop hardware and sales channel |
| PAIX (Netherlands) | Provider of data center services | Revenue: USD 1m | Seeking to raise USD 24m for data center construction |
| CDQ (Switzerland) | Operator of data management solutions provider and cloud platform | Forecasted revenue: CHF 1.7m | Seeking 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 solutions | Revenue: USD 5m | SRT targets minimum USD 10m in equity-based fundraise strategy to drive business growth |
| Altix (France) | Designer of automated production equipment | Revenue: EUR 15m | Held by French-PE firm Amundi Private Equity Funds for 21 months |
| One of a Kind Technologies (Netherlands) | Provider of machine vision solutions | Revenue: EUR 8m | Held by Belgium-based PE firm Gimv for 21 months |
| Faure Herman (France) | Manufacturer of helical turbine and ultrasonic flow meters for liquid measurement | Valuation: USD 22m | Held 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 heat | NA | Held by UK-based PE firm Hg for 35 months |
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