Incident: On May 15, Green League Technology announced the 2023 restricted stock incentive plan. It plans to grant restricted shares to 469 incentive targets, including company directors, senior managers, and key business personnel. At the same time, the company issues shares to specific targets, to no more than 35 people (including 35), and the number of shares issued does not exceed 30% of the total share capital before issuance, or 240 million shares.

Equity incentives set annual performance assessment targets, demonstrating the company's confidence to grow over the next three years. The number of restricted shares to be granted in this incentive plan is 27.646 million shares, accounting for about 3.46% of the company's total share capital when the draft incentive plan was announced. Among them, 9.589 million restricted shares were granted, accounting for about 1.20% of the company's total share capital at the time the plan was announced, with a grant price of 6.77 yuan/share; 1,857 million stock options were granted, accounting for about 2.26% of the company's total share capital at the time the plan was announced, with a grant price of 13.54 yuan/share. At the same time, the company's current incentive plan sets performance assessment targets for operating income and net profit respectively. The corresponding revenue targets for 2023-2025 were 3.36 billion yuan, 4.10 billion yuan, and 50.00 billion yuan respectively, up 28%, 22%, and 22% respectively; net profit targets were 343 million yuan, 446 million yuan and 600 million yuan respectively, up 1125%, 30% and 35% respectively over the previous year. Guided by equity incentive targets, we believe that the company will continue to reduce costs and increase efficiency on the basis of maintaining high growth on the revenue side in the next three years, driving net profit growth to exceed revenue growth.

It is determined to enhance the company's R&D capabilities and deepen the layout of the company's emerging business. The total amount of capital raised this time did not exceed 1.2 billion yuan, mainly used to 1) enhance R&D capabilities and enhance core competitiveness in emerging fields. Among them, the capital raised to be invested in R&D headquarters base construction projects and IT application innovation and security research projects is 475.5561 million yuan and 126.6568 million yuan respectively; 2) Strengthen the transformation of achievements in emerging fields and achieve an increase in product market share. Among them, the capital raised to be invested in data security and privacy computing R&D and industrialization projects and 5G+ industrial Internet product and solution development projects is 136.4958 million yuan and 101.88 million yuan respectively; 3) enhance capital strength and improve the company's resilience to risks. Among them, the supplementary working capital project plans to raise 359.4952 million yuan.

Investment advice: We are optimistic about the firm promotion of the company's channel strategy. We expect to achieve revenue of 32.32/4,014 billion yuan in 23/24, achieve net profit of 316.414 million yuan to the mother, and maintain the company's rating as “highly recommended”.

Risk warning: risk of increased competition in the industry; risk of channel expansion falling short of expectations; risk of policy implementation falling short of expectations.