Everbright Tongchuang announced the 2024 Restricted Stock Incentive Plan (draft): The total number of Class I restricted shares and Class II restricted shares to be granted under the incentive plan will not exceed 1,520 million shares, accounting for about 2.00% of the total share capital. Of these, 1.267,500 shares will be awarded for the first time, accounting for about 1.67% of the total share capital. The reserve granted 252,500 shares, or approximately 0.33% of the total share capital. The source of the shares is the company's targeted issuance of RMB A shares of the company's common stock to incentive targets. The grant price was 26.27 yuan/share, the total equity incentive fee was 147.63 million yuan, and the amortization expenses for 2024/2025/2026/2027 were 785.60/ 471.75/192.95/2600 million yuan, respectively.

Key points of investment

▌Deeply bind the interests of core members and stimulate business vitality

The number of equity incentive recipients this time was 60, including Zhan Mengyun (board secretary), Wang Qingkun (core staff), and 58 other core employees of the company. Adequate incentives further improve the company's revenue distribution mechanism, deeply bind the interests of core employees, further stimulate operating vitality, and continue to grow in the future business performance of major companies.

▌Unlocking the target shows the company's confidence in the future. High performance expectations clearly state that the restricted stock incentive plan lifts sales restrictions (ownership) after 1/2/3 years after the grant date, and the sales restrictions (ownership) ratio for unreserved shares are 40%/30%/30%, respectively. The plan lifts sales restrictions in proportion according to the actual degree of completion and personal assessment. The actual individual release amount is the number of shares unbanned by individuals in the year* company release rate* individual release ratio, of which:

Company ban release ratio: 2024/2024-2025/2024-2024-2024-2026 cumulative revenue performance assessment target value is RMB 1,320/32.20/5.70 billion yuan, and the trigger value is RMB 1,188/28.98/5.130 billion yuan. If the company's cumulative revenue exceeds the trigger value but falls below the target value, the company-level attributable ratio is 90%. If the company's cumulative revenue falls below the trigger value, the company-level attributable ratio is 0%.

Personal ban release rate: The individual assessment results are divided into four levels: “A”, “B”, “C”, and “D”. The corresponding unban (belonging) rates are 100%, 80%, 60%, and 0%, respectively.

Assuming that the company's performance in the next three years will meet the assessment target, and the implied revenue for 2024/2025/2026 is 1,320/19.00/2.48 billion yuan, we believe that the performance assessment target setting of the company's current incentive plan fully demonstrates the company's confidence in long-term development, and expectations for high performance growth are quite clear.

Profit forecasting

Overall, we maintain our profit forecast for the company. We expect revenue for 2023-2025 to be 11.12, 14.68 billion yuan, and 18.34 billion yuan, EPS of 2.15, 3.00, and 4.06 yuan respectively. The current stock price corresponds to PE of 15.5, 11.1, and 8.2 times, respectively, giving a “buy” investment rating.

Risk warning

(1) Downstream industry prosperity falls short of expected risk; (2) R&D progress falls short of expected risk; (3) risk that shipments from major core customers fall short of expectations; (4) risk of carbon fiber price fluctuations.