Description of the event
Synes announced the 2023 restricted stock incentive plan. It plans to grant 1,8535 million restricted shares, accounting for 1.95% of the company's current total share capital; of these, 1,685 million shares will be granted for the first time, accounting for 1.78% of the company's total share capital; 168,500 shares will be reserved, accounting for 0.18% of the company's total share capital. The grant price was 13.93 yuan/share (the closing price on March 21 was 33.87 yuan/share).
Incident comments
The incentive targets include the chairman/general manager, deputy general manager/director/chief financial officer and key personnel. The number of people motivated this time was 122, accounting for about 17.2% of the company's total number (2022H1), including the chairman, director, general manager, director, deputy general manager, core technical staff and other core key employees, which is conducive to consolidating the company's core team, increasing employee motivation, and enhancing the company's competitiveness.
The company targets 2023-2025 revenue CAGR = 39.6%. The assessment period for the incentive plan is 2023-2025. The award conditions are that the revenue for 2023 is not less than 800 million yuan, the cumulative revenue for the two years 2023-2024 is not less than 1.9 billion yuan, and the cumulative revenue for the three years 2023-2025 is not less than 3.4 billion yuan. Based on the 2022 Express Report, the corresponding compound revenue growth rate for 2023-2025 is 39.6%. Assuming that the assessment target has just been completed, the revenue for 2023-2025 was 8/11/15 billion yuan respectively, and the corresponding YOY revenue was 45.1%/37.5%/36.4%, respectively.
Starting with the prevention and control of heavy metal pollution, the company is a “one-stop” comprehensive service provider for heavy metal treatment. It has the advantages of technology, brand and business collaboration, which is expected to bring significant flexibility in performance.
1) Industry growth and company advantages: In 2023, as standards become stricter, the implementation of “Opinions on Further Strengthening the Prevention and Control of Heavy Metal Pollution”, the third round of central environmental protection inspections, and the third national soil survey, the industry is expected to experience a peak in demand.
The company's technology cost advantage is remarkable. Sewage acid technology accounts for 62.3% of the new market in the copper, lead and zinc industry, and 5% of the stock market. The new market has strong ability to take orders, and there is plenty of room for transformation in the stock market. It is estimated that the operating market space of the entire industry/non-ferrous metals industry/copper-lead-zinc industry/Zijin mining (considering overseas production capacity) in 2023 is about 760/218/71.2/890 million yuan. Considering copper, lead and zinc as the company's target industry, if the market share of sewage treatment reaches 30% and the market share of wastewater treatment is 10% (including EPC+ operations), the company's revenue can increase 86.7% compared to 2022. As of 2022 M8, the amount of on-hand orders for the company's comprehensive solutions without tax was 353 million yuan, which has achieved a significant increase compared to orders of 229 million yuan in stock at the end of 2021.
2) The two shareholders are the core customers: Zijin Mining's shareholding ratio is 21.22%. They are the company's two shareholders. The sales volume of related transactions remained around 72 million yuan in 2019-2021, accounting for the company's revenue share range of 16%-20%, accounting for 10.07%, 6.59% and 5.07% of Zijin Mining's environmental protection and ecological funds, respectively. Order support is expected to increase after the company goes public in November 2022. According to the company announcement, the company's related transactions with Zijin Mining are expected to be 150 million yuan and 350 million yuan in 2022-2023, accounting for 23.03% and 24.97% of the main revenue respectively, up 108.8% and 132.80% over the previous year.
Profit forecasting and valuation. It is estimated that 2022-2024 will achieve operating income of 551/ 803/1,124 million yuan, with a year-on-year growth rate of 43.4%/45.7%/39.9% respectively; the return mother's net profit was 0.68/1.09/157 million yuan, an increase of 52.7%/60.2%/44.3% over the previous year, corresponding to PE valuation of 47.1x/29.4x/20.4x, maintaining the “buy” rating.
Risk warning
1. Technology upgrade iteration and risk of technology leakage; 2. Risk of marketing of new technologies for heavy metal pollution control.