Company Profile

Tianjin Tianhai Investment Co., Ltd., formerly TIANJIN MARINE SHIPPING CO., LTD., is principallyengaged in marine transportation services. The Company operates its businesses through internationaland domestic shipping container transportation and related business. The Company’s major routesinclude International liner cargo shipping routes to South Korea and Southeast Asia, with Tianjin,Shanghai, Quanzhou and Shantou as the base ports, as well as domestic trade routes to Yingkou,Qingdao, Rizhao and Longkou, with Quanzhou and Shantou as the base ports. The Company is alsoinvolved in provision of ship chartering service, shipping agency and labor dispatching service.

Event

Tianjin Tianhai Investment Company, Ltd. announced the transection of acquiring Ingram Micro hasreceived clearance from the Committee on Foreign Investment in the United States （CFIUS） to proceed.

Comment

The merger remains subject to approval from China's State Administration of Foreign Exchange （SAFE）and other customary closing conditions. The companies continue to expect the transaction to close in2016, whereby Ingram Micro will become a part of HNA Group, a Hainan‐based Fortune Global 500enterprise group and a leader in aviation, tourism and logistics, which is the largest stockholder ofTianjin Tianhai.

Ingram Micro started operation in China in 1997 but it main business still focus on Europe and America.

We expect experience of HNA Group will help Ingram Micro gain speed in obtaining market share onChinese market. At the same time, as world's largest wholesale technology products distributordistributing and marketing a large variety of electronics which source from tech giants worldwide,Ingram Micro is able to facilitate HNA’s overseas expansion as well with its wide‐spreading salesnetwork.

Ingram Micro is also a master Cloud Service Provider （mCSP）， offering channel partners andprofessionals in 17 countries access to a global marketplace, expertise, solutions and enablementprograms that empower organizations to configure, provision and manage cloud technologies. It hasincorporated over 5000 cloud functions from 2000 enterprises. However, related products are notavailable in China due to safety reasons. Tianjin Tianhai Investment will probably bring in the businessafter the transaction.

In addition, Ingram Micro may involve in supply chain finance in the future. HNA Group have certificatesin the field issued by regulating authorities. Tianjin Tianhai Investment paid USD 6 billion for IngramMicro, USD 231 million of which is for stock incentive plan.

Earnings Forecast and Investment Grading:

Assuming net income of Ingram Micro reaches USD 360 million in 2017 and USD 450 million in 2018（USD/CNY=6.8）， we estimate Tianjin Tianhai Investment will get another CNY 1.13 billion and CNY 1.55billion net profits in the two years respectively. Stakes in Ingram Micro held by China United SMEGuarantee Corporation is expected to contribute CNY 120 million net profits as well. We made EPSforecast for Tianjin Tianhai Investment at CNY 0.43 in 2017 and CNY 0.58 in 2018, implying 21.6x/16xPE. Reiterate BUY.

Potential Risks: Slower‐than‐expected M&A progress, sharp drop of demand for IT components,business in China generates worse‐than‐expected results.