It is proposed to promote the fourth phase of employee stock ownership and set a three-year non-performance deduction target of 62% compound growth. The company issued the fourth phase of the employee stock ownership plan (draft), which intends to grant a total of 16.92 million shares to 8 directors, supervisors, senior managers, and 13 core employees (from the company's secondary market buyback shares at the beginning of 2019). Accounting for 1.26% of the company's total share capital, the stock ownership plan buys buyback shares at a price of 3.63 yuan per share, raising a total of about 61.42 million yuan. The performance evaluation target of the employee stock ownership plan is to deduct the non-return net profit from 2021 to 2023 (excluding the influence of the fees paid by the employee stock ownership plan) to reach RMB 5.20 million, respectively. The compound growth rate for three years is up to 62% with an increase of 116%, 40% and 40% respectively. It is expected that the company's growth will mainly come from the steady growth of the main business of traditional public clothes and the accelerated expansion of industrial interior equipment. The shares of the first three phases of the company's employee stock ownership plan account for 0.28%, 0.62%, 0.40%, respectively. This time, the scale of the employee stock ownership plan is significantly larger, and a higher profit growth target has been set, which is expected to fully mobilize the enthusiasm of the backbone of the company, improve stability, and accelerate the growth of the company.

The industrial interior continues to develop and is expected to become an important engine of growth in the future. The company is one of the earliest industrialized interior enterprises in China. at present, its products have changed to the seventh generation, and it has provided more than 5 million square meters of industrial interior products in key cities across the country, covering residential, hotel, medical care, office and other fields. the first-mover advantage is outstanding and the technology accumulation is profound. Based on the accumulation of previous technology, the company has created two industrial built-in production lines, and actively promoted the upgrading of BIM information, realizing the integrated management and control scheme design and deepening, intelligent production, construction and installation and other processes. Relying on the advantages of technology, production capacity and information technology, the company continues to vigorously develop industrial interior business. We expect that since the beginning of the year, the company has signed and won the bid for industrial interior orders of 17-1.8 billion yuan. It is expected that with the rapid development of the assembly decoration industry, the company will accelerate the release of production capacity and continue to open up the market, and industrial interior is expected to become an important engine for the growth of the company.

Carbon neutralization and "competitive quality" add momentum to the promotion of industrial interior. Since the beginning of this year, domestic carbon neutralization promotion policies have been introduced intensively, and industrial internals with energy conservation and emission reduction are one of the important means to achieve building carbon neutralization, and the follow-up is expected to continue to benefit from the promotion of dual-carbon goals. In addition, this year, many cities have successively introduced "competitive quality" rules in the process of centralized land supply, and the follow-up "competitive quality" may become an important adjustment direction of China's future soil auction rules and open a new chapter in the construction of high-quality housing in our country. According to the evaluation contents and scoring standards of high-standard commercial housing construction plans in Beijing, green buildings, prefabricated buildings, ultra-low energy consumption buildings, livable technology, new management mode and other directions are expected to become the core orientation of the "competitive quality" of housing enterprises in the future. among them, industrialization is built into green buildings, prefabricated buildings, livable technology, new management models and other fields, and the follow-up is expected to continue to benefit.

Investment suggestion: based on the performance growth target of the company's employee stock ownership plan, we have raised the company's net profit from 2021 to 2023 to RMB 5.5 million, respectively, and increased by 73%, 37%, 36%, and 80%, respectively. The CAGR in 2023 is 80%, and EPS is 0.77 yuan, respectively. The current stock price corresponds to PE in 18-13-9, respectively, and the "Buy" rating is maintained.

Risk tips: the risk of rising prices of raw materials, the promotion of industrial built-in business is not as expected, the risk of bad debts caused by accounts receivable, the risk of stricter real estate regulation, the risk of financial internal control and punishment, and so on.