Core views

The company promulgated an equity incentive plan to improve the certainty of future performance while streamlining the company's mechanisms and fully mobilizing the enthusiasm of core personnel in key positions, which is expected to fulfill the company's long-term growth potential. Furthermore, the company issued a follow-up investment plan, which will help to further improve the medium- to long-term incentive mechanism, bind the company's core team, and ensure the long-term stable development of the enterprise. At the same time, as an upstream company in the parent company's industrial chain, the investment project company is expected to extend the company's industrial chain upstream and give full play to the synergy effect.

occurrences

On December 20, the company issued a summary announcement of the 2023 stock options incentive plan (draft) and an announcement on implementing the project follow-up plan to invest in the establishment of participating subsidiaries and related transactions.

Brief review

1. Equity incentives enhance performance certainty and realize long-term growth potential. Judging from the level of incentives, the total number of stock options to be granted under this incentive plan does not exceed 21.616 million shares, accounting for about 2.8% of the company's total share capital of 772 million shares at the time the draft incentive plan was announced, and the incentive effect was sufficient.

In terms of the number of people covered, the initial incentive target of this incentive plan was 431 people, accounting for 18.95% of the company's total employees at the end of 2022. It mainly includes the company (including wholly-owned and holding subsidiaries) directors, senior managers, other senior managers, and various key personnel. It covers a wide range of areas and binds the company's core team and technical backbone.

Judging from the assessment goals, the exercise assessment years for this incentive plan are the three fiscal years 2024-2026. Using 2022 as the benchmark, the annual revenue growth was not less than 20%/35%/50%, respectively; R&D investment growth was not less than 20%/25%/30%, respectively. Furthermore, the return on total assets is not less than 7.0%/7.2%/7.5%, respectively. This shows the importance the company attaches to R&D investment and shows the company's confidence in growth.

Judging from the cost impact, if granted in early February 2024, the company expects the total amortization expenses to be 155.8514 million yuan, and the amortization amounts for 2024-2028 are 5158.97/5627.97/3246.90/1443.07/1.0823 million yuan, respectively.

We believe that with the implementation of equity incentives, while improving the certainty of future performance, streamlining the company's structure and fully mobilizing the enthusiasm of core personnel in key positions, it is hoped that the company's long-term growth potential will be realized.