Incidents:
On January 16, 2024, the company announced the “2024 Employee Stock Ownership Plan (Draft)”. No more than 245 people, including company directors, supervisors, senior managers, heads of independent business departments, and core business executives, participated in the employee stock ownership plan, raising no more than 250 million yuan in total capital.
Employee stock ownership plans strengthen long-term incentives and operational stability
This employee stock ownership plan is the fifth time since 2017 that the company has launched an employee stock ownership plan. The purpose is to establish and improve the benefit-sharing mechanism for employees and shareholders, improve the level of corporate governance, enhance the cohesion and competitiveness of employees, mobilize the enthusiasm and creativity of employees, and promote the long-term, sustainable and healthy development of the company. Among them, the total subscription ratio of 9 directors and supervisors is expected to account for 19.2% of the current employee stock ownership plan, showing confidence in the company's future development.
The previous employee stock ownership plan was the “2023 Employee Stock Ownership Plan”. The relevant bill was reviewed and implemented by the Extraordinary General Meeting of Shareholders on January 6, 2023, and the purchase plan was completed on January 28, 2023. The 2023 Employee Stock Ownership Plan account purchased 295 million yuan of Meihua Biotech shares through centralized bidding in the secondary market, with an average price of 10.45 yuan/share.
Continued buybacks and executive holdings increase show long-term confidence
Since 19, the company has introduced several share repurchase plans. The latest repurchase plan was announced on April 29, 2023. It is proposed to cancel the share capital with a repurchase price of no more than 12 yuan/share and a total repurchase amount of 800 to 1 billion yuan to cancel the share capital. Furthermore, on January 8, 2024, the company announced that a total of 35 members of the board, supervisors, and other core management plan to increase their holdings of the company's shares within six months from that day. The total increase in the company's stock holdings is not less than 80 million yuan, demonstrating the management's confidence in the company's long-term development.
Maintain high dividends and high dividend rates for a long time
Since its listing, the company has been giving back to shareholders with high dividend rates and dividend rates. The average dividend rate and dividend ratio for 2011-2022 achieved 4.0% and 69.9% respectively. Since listing, the company's cumulative dividend amount has reached 9.15 billion yuan, with a cumulative dividend rate of 50.3%; in the past five years (18-22), the cumulative cash dividend reached 5.14 billion yuan, with a cumulative dividend rate of 52.5%, and an average dividend rate of 5.85%.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2023-25 to be 279/309/32.4 billion yuan, with year-on-year growth rates of 0%/11%/5%, respectively, and net profit to mother of 35/45/4.9 billion yuan, respectively, with year-on-year growth rates of 21%/28%/9%, EPS 1.2/1.5/1.7 yuan/share, respectively, and a 3-year CAGR of 4%. In view of the high concentration of the company's main business and improved prosperity, and deep cultivation of synthetic biology to open up room for growth, we maintained the company's target price of 15.52 yuan and maintained a “buy” rating.
Risk warning: Prices of su/lysine and corn/coal fluctuate greatly, potential competitors enter, and progress in the field of synthetic biology falls short of expectations