Event: the company announced the draft equity incentive, the company's core management staff and core industry (technical) backbone (137people) 2.457 million shares (1.08% of the total share capital), reserved shares of 412000 shares (0.18% of the total share capital), a total of 2.869 million shares (1.27% of the total share capital).
The deregulation assessment years for the first time and reserved restricted stocks granted under this incentive plan are two fiscal years from 2020 to 2021, and the company assesses the following company-level performance indicators in each year, in order to achieve the performance evaluation target as one of the conditions for the lifting of sales restrictions in the current year. The specific plans are as follows:
Equity incentive scheme:
The first sales restriction period: the operating income in 2019 is 965 million yuan, and the growth rate of operating income in 2020 is not less than 0% (that is, the operating income in 2020 is not less than 965 million yuan).
Then unlock 50%
The second lifting period: if the operating income in 2019 is 965 million yuan and the growth rate of operating income in 2021 is not less than 33.16% (that is, the operating income in 2021 is not less than 1.285 billion yuan), 50% will be unlocked.
The incentive objects of the relevant departments of online business not only need to meet the performance evaluation targets at the company level, but also need to meet the performance assessment targets of their respective departments in the corresponding assessment year before the sales restrictions can be lifted according to the corresponding proportion. The specific performance review requirements for the first time and reservation granted by the relevant departments of online business are as follows:
The first period of lifting the restriction:
Based on the e-commerce and retail revenue of 123 million yuan in 2019, the growth rate of online operating income in 2020 is not less than 66.67% (that is, online operating income is not less than 205 million yuan in 2020), then unlock 50%.
The second period of lifting the restriction:
Based on the e-commerce and retail revenue of 123 million yuan in 2019, the growth rate of online operating income in 2021 is not less than 347.15% (that is, the company's online operating income in 2021 is not less than 550 million yuan), then unlock 50%.
Comments:
The equity incentive plan covers the core team, enhances the driving force of future development, and demonstrates confidence. We believe that on the one hand, this equity incentive can further activate the vitality of internal employees and bind core management and technical talents, on the other hand, it also shows the company's firm confidence in future performance growth. We insist that 2019 is the bottom of the company's performance, and profits bottom before revenue, 2020 is expected to exceed expectations to achieve the incentive target, the profit side will also significantly improve, will become a long-term performance inflection point.
The high growth of e-commerce is expected. The equity incentive online team sets a separate goal, which fully reflects the company's attention to online business and its future development potential. The 20-year target growth rate is 66.67%. The 21-year target growth rate is 168.3%, which fully shows that the company's layout and development of e-commerce channels in recent years has reached the harvest period, and e-commerce business will become a significant increment and driving force for future business development.
The equity incentive plan as a whole reflects not only the binding of the core team, but also the requirements of potential departments.
Reiterate the logic of investment:
1) after the accumulation of national brands, the bottom of the fundamentals ushered in a recovery.
The company has been founded for 20 years and is a representative brand of domestic products. In recent years, with the offline adjustment and optimization in recent years, we believe that with the active adjustment of the company's offline in recent years, the offline adjustment process in 2019 is coming to an end, with the optimization of the structure of the dealer team, 20Q2 has returned to positive growth, and 20 years as a whole will usher in offline recovery or return to the growth track.
2) 20 years is the key year for e-commerce, with the in-depth strategic cooperation with Kuaishou Technology's head anchor to bring goods, equity incentive landing e-commerce team ready to go.
The company established a 100-person e-commerce team in 2018, with members from BABA and senior operation companies in the industry. Live broadcast with goods, the company and Kuaishou Technology head anchor Sanda Brother in-depth strategic cooperation for business sharing, the end of June Sanda Brother rebroadcast will usher in Kuaishou Technology with the cargo end of full blossom. It is expected that the share of e-commerce business will increase significantly in 20 years, and the proportion of revenue will increase to about 25-30%, with great flexibility in e-commerce performance.
3) the category expands from daily chemical products to cosmetic and skin care. In the past two years, we have accumulated cushion layout and cosmetic categories, and 20 years will usher in the harvest year. Agent brands such as Delphi and Riplesi are expected to expand their efforts in 20 years. In addition to the original brand, 20 years is expected to add new imported brand agents, expand the makeup and skin care brand matrix, the business sector will gradually become bigger and stronger.
Profit forecast and valuation: we expect the company to achieve a net profit of 1.39x1.62 / 201 million in 20-22, with a buy rating corresponding to the current price of 25.5G, 21.9max, 17.7x, combined with industry PS and PE valuation levels.
Risk tips: deterioration of competition in e-commerce industry, inventory risk and so on.