Items:
The company issued a 2019 restricted stock incentive plan (draft) on July 18, 2019.
Comments:
It is proposed to grant restricted stock, the assessment target is relatively robust, and amortization has little impact on net profit. The company intends to grant no more than 1.67 million restricted shares, accounting for 1.24% of the total share capital, of which 1.57 million shares are granted for the first time and 100000 shares are reserved at a proposed grant price of 12.61 yuan per share. The program motivates a total of 100 people, including directors, senior managers, middle managers and core staff. This restricted stock grant has a wide range and is expected to achieve a sufficient incentive effect. The performance evaluation target is: taking 2018 as a reference, the growth rate of net profit from 2019 to 2021 is not less than 10%, 25% and 45%, respectively. We believe that the setting of business assessment goals is relatively stable, which helps to lock in the interests of core employees and help the business to move forward steadily.
Incentive expenses are expected to be amortized 2.7628 million yuan, 4.4775 million yuan, 1.0083 million yuan and 217000 yuan respectively from 2019 to 2022, totaling 8.4657 million yuan, which has little impact on net profit.
Once again inject the momentum of development, the follow-up performance is worth looking forward to. The company's business growth has improved significantly since 2017, with revenue growing at a compound rate of 43% from 2016 to 2018, deducting a compound growth rate of 34% for non-net profit. The latest performance forecast shows that net profit in the first half of 2019 increased by 31.02% over the same period last year. 39.76%. The improvement of business growth comes from the improvement of the strength of trusted identity technology products with e-passport as the core, the expansion of domestic and foreign markets, and the creation of new growth points in finance, government affairs, transportation and other fields around trusted identity derivatives.
We believe that the proposed equity incentive at that time is to inject new momentum on the basis of good momentum. On the one hand, it helps to stabilize employees, stimulate vitality, strengthen the existing advantages, and help the business to expand better; on the other hand, it also shows that the management of the company continues to be optimistic about the medium-and long-term development, and the follow-up performance is worth looking forward to.
Yu Qiang, a strong e-passport, has entered the harvest period in many fields. Focusing on trusted identity technology, the company has upgraded from smart device manufacturers to identity information integrated service providers, and many areas are in a period of rapid growth.
1) E-passport products have reached the international advanced level, leading the domestic market share, short-term benefit upgrade to replace the release of demand, in the long run, technology update and penetration will continue to open the growth space; 2) Passport management platform is an important extension of this field, but also the development trend of the industry, has expanded a number of important customers, from the trial period to the rapid growth period, it is expected to further strengthen the company's profitability 3) the demand for trusted identity technology other than e-passport is more diverse, and the company has expanded many fields based on technology accumulation and business understanding, and continues to deepen in the field of integrated identity information management. As the core link of the electronic identity era, the participants will fully benefit. 4) overseas business benefits more diversified products and customers, entering a new stage of rapid growth, the company, as a domestic leader, is expected to become a more important global market participant.
Investment advice: considering the rapid progress of transportation information, the possible transition from rapid growth to steady growth, as well as the new cost amortization of performance equity incentives, we downgrade the company's net profit from 2019 to 2020 to 141 million yuan and 186 million yuan (151 million yuan and 208 million yuan respectively before the reduction), and forecast 2021 net profit of 239 million yuan, corresponding to 23 times, 17 times and 13 times PE respectively. Maintain the target price of 39.08 yuan per share and maintain the "push" rating.
Risk hint: the relevant policies are not up to expectations, and changes in the international situation affect overseas business.