Introduction to this report:
The equity incentive plan has passed the shareholders' meeting, and the high level of excitement has led to high costs. Assuming that November 28 is the award date, the total cost of equity incentives is 36.85 million, and the amortization in 2017 was 25.05 million, putting some pressure on reaching the 17-year performance conditions.
Key points of investment:
The company's equity incentive plan passed the shareholders' meeting on November 21. This time, stock options are very exciting, and the cost of equity incentives is related to the stock price on the day they are granted. Currently, stock prices are under a lot of pressure to amortize the costs of equity incentives in 2017, putting some pressure on reaching the conditions for exercising performance in 2017. Due to equity incentive costs and the impact of additional shares, we slightly adjusted the company's 2016-2018 EPS to 0.30/0.30/0.34 yuan (adjustment -0.01/+0.01/-0.01) to maintain the “increase in holdings” rating, with a target price of 24.91 yuan.
Equity excitement and high costs are high, putting some pressure on achieving the conditions for exercising performance in 2017. The number of stock option shares this time was no more than 13.7 million, with a total value of 232 million yuan calculated at the exercise price of 1,693 yuan/share. The high level of equity excitement and the high exercise price (compared to the closing price of 16.8 yuan/share the day before the announcement of the draft equity incentive was announced) show confidence in the company's future development while the management costs brought about are relatively high. We assume that using November 28 as the award date, the total cost of this equity incentive is 36.85 million yuan, of which the cost amortized in 2017 was 25.05 million yuan, which is equivalent to 37.8% of the company's net profit to the parent in 2015, putting some pressure on the company to achieve the performance exercise conditions in 2017 (compared to 20% compared to 2015). The equity incentive plan has been approved by the shareholders' meeting and still needs to be confirmed on the grant date.
The implementation of a fixed increase and the introduction of equity incentives promote the company's development by leaps and bounds. The company's first capital market refinancing has been implemented, and the first stock option incentive has been approved by the shareholders' meeting. The company has already begun to strengthen its use of the capital platform of listed companies. In the future, it is expected to achieve leapfrog development by further leveraging the majority shareholders' advantages of high-quality assets (Tongrun auto parts+Tongrun driving equipment) +high share share (54.62%).
Catalysts: Confirmation of equity incentive grant dates; promotion of asset securitization or extension expectations.
Core risk: Asset securitization or extension expansion is blocked.