Incidents:
On the evening of March 21, 2023, Sainz released the 2023 Restricted Stock Incentive Plan (draft). The main points are now sorted out as follows:
Key points of investment:
Number of shares: This incentive plan granted a total of 1,853,500 restricted shares, accounting for 1.95% of the company's total share capital at the time the incentive plan was announced. Among them, 1,685 million shares were granted for the first time, accounting for 1.78% of the company's total share capital at the time the incentive plan was announced, accounting for 90.91% of the total restricted shares granted under this incentive plan; 168,500 shares were reserved, accounting for 0.18% of the company's total share capital when the incentive plan was announced, accounting for 9.09% of the total restricted shares granted under this incentive plan.
Incentive targets: The total number of incentive targets was not more than 122 people, including directors, executives, and 10 core technical forces including Gao Weirong, Jiang Guomin, and Qiu Jiangchuan, who encouraged a total of 574,000 shares; 112 core employees were rewarded a total of 1,111 million shares, and the number of incentives per core employee was about 10,000 shares.
The ownership ratio for restricted shares granted for the first time is 30%/30%/40%, and the vesting arrangement is made every 12 months after 12 months after the first grant.
Grant price: 13.93 yuan per share. After the vesting conditions are met, the incentive target can purchase additional A-share common shares issued by the company at a price of 13.93 yuan per share.
Performance assessment: The revenue for 2023 is not less than 800 million yuan, the cumulative revenue for 2023-2024 is not less than 1.9 billion yuan, and the cumulative revenue for 2023-2025 is not less than 3.4 billion yuan.
Based on the annual minimum assessment standard, the corresponding revenue for 2023-2025 is 8/11/15 billion yuan.
Incentive costs: The total cost of incentives is 34.74 million yuan. The incentive costs for 2023-2026 are:
1507/1246/602/1.18 million yuan.
Program review: This incentive plan (draft) sets a clear target threshold for the scale of revenue in 2025. According to the company's “2022 Earnings Report”, the estimated revenue for 2022 is 550 million. Based on the 2025 revenue of 1.5 billion, the compound revenue growth rate for 2022-2025 is 40%.
Revenue growth forecasts for 2025 are gradually becoming clear. The company-level assessment index is operating income. Operating income is an important financial indicator for measuring the company's operating conditions and market share and predicting the company's business expansion trends. It reflects the company's growth ability and industry competitiveness. The performance assessment is set up in a reasonable manner, and factors related to the macroeconomic environment, industry development and market competition, the company's operating conditions and development plans have been fully considered.
Recommended logic: (1) Core technology reduces hazardous waste treatment costs for enterprises. Compared with traditional methods and processes, one of the company's core technologies, the “Waste Acid Resource Treatment Series Technology” can reduce hazardous waste emissions by more than 90% for non-ferrous metal smelters and reduce comprehensive treatment costs by 40%-70%. Environmental protection expenditure is a rigid expenditure for non-ferrous metallurgy companies, and new technology paths that are more economical and environmentally friendly in the back-end may receive more attention from enterprises. (2) Backed by Zijin Mining, strong shareholder strength: Zifeng (Xiamen), a subsidiary of Zijin Mining, has an investment shareholding ratio of 21.22% (as of 2022/11/25). In 2023, related transactions between Sainz and Zijin Mining and related companies controlled by Zijin Mining are expected to be 350 million, and transactions with related parties of Zijin Mining from January to November 2022 were 96.03 million. Backed by Zijin Mining's shareholders' resource advantages, Zijin's environmental protection expenses have provided the company with increased revenue, and Zijin's overseas mine environmental protection projects may also become a platform for the company to go abroad to showcase its business. (3) The proportion of back-end pharmaceutical operation services has increased, and the recycling business has opened up room for future growth:
In the future, the company will focus on the field of heavy metal pollution prevention and control, continue to develop technology research and innovation, optimize technological process design, expand the scope of application, and continue to meet customer needs; accelerate business restructuring and increase the proportion of operation and service business; and actively arrange resource recovery to achieve high-quality and sustainable development. With the improvement of the company's process technology, the company's business scale has grown steadily, and the development direction has shifted from simple pollution prevention and control to balancing pollution control and resource recycling.
Profit forecasting and investment ratings: We expect revenue for 2023-2024 to be 850 million, 1.22 billion, 1.65 billion, and net profit to the mother of 108 million, 181 million, 246 million (since the current equity incentive board and supervisory board have all passed, the shareholders' meeting is likely to pass, so the cost of this equity incentive event is included in the profit forecast), and the market value PE for March 21 is 29.8/17.8/13 times. First coverage, giving a “buy” rating.
Risk warning: Environmental protection policies and regulations have been relaxed, incentive plans have not been passed. Downstream customer capital expenditure has slowed due to the decline in the macro environment, accounts receivable repayment is slow, new technology paths have replaced the company's technology path, related transactions reduce the overall company's gross profit margin, and liquidity risks in the secondary market