Incidents:
On February 4, 2024, Kun Heng Shunwei announced that the company plans to use 569 million shares as an equity incentive plan. Of these, the number of restricted shares granted for the first time is 469 million shares, and a total of 54 incentive recipients will be awarded for the first time, at a grant price of 33.80 yuan/share.
Investment highlights:
The performance assessment goals are high, which shows the company's confidence in development. The equity incentive plan was unlocked in three phases, corresponding to the 2024-2026 assessment target, with the 2023 operating income growth rate reaching 30%/30%/30% for the corresponding assessment year, respectively; the minimum attribution target is based on 2023 revenue, and the annual revenue growth rate for the corresponding assessment reached 24%/22%/21%, respectively. The company's overall assessment goals are high, which shows the company's confidence in future development.
Incentive programs cover a wide range of topics and help motivate the team. The equity incentives were granted for the first time to a total of 54 people, accounting for 41.22% of the company's total number of 131 employees as of December 31, 2023, including the company's senior management, core technical personnel, and others that the board of directors believes need incentives. The incentive plan covers a wide range of topics, which is conducive to fully mobilizing employees' enthusiasm and creativity, and effectively enhancing the cohesion of the core team and the core competitiveness of the enterprise.
The product is positioned as high-end, and the category continues to expand. The company is one of the few domestic companies focusing on the development of high-end radio test simulation instruments. After years of accumulation, the company has mastered four types of core technologies for the development of high-end radio test and simulation instruments, and is highly competitive in the domestic high-end radio test simulation instrument market. At the beginning of 2023, the company launched a high-performance spectrum/vector signal analyzer, and will continue to develop high-end radio test simulation instruments including high-performance vector network analyzers and comprehensive testers in the future.
Profit forecast and investment rating Considering that the company currently has many products under development and high R&D expenses, we slightly lowered the company's 2023/2024/2025 net profit forecast to 0.99/1.25/162 million yuan respectively, corresponding to PE 32/25/19 times; however, the company's core products are highly competitive and orders continue to grow. We are optimistic about the long-term value generated by the company's R&D investment and the continuous innovation ability of the R&D team, so we maintain the “buy” rating.
Risks suggest that downstream customer development progress falls short of expectations; new product development and implementation progress falls short of expectations; risk of tight component supply; risk of large fluctuations in secondary market stock prices; risk of loss of core technical personnel; and risk of declining gross margin.