Event: Fortune Precision Announces 2024 Restricted Stock Incentive Plan (Draft):
Number and price of shares to be granted: The number of restricted shares to be granted incentives was 1.65 million shares, accounting for about 0.79% of the total share capital at the time of publication of the announcement. Of these, 1.446 million shares were granted for the first time, accounting for 87.6% of the total restricted shares to be granted under the incentive plan. 204,000 shares are reserved. The award price is 38 yuan/share.
Recipients: A total of 47 people, including 10 company directors, executives and core technical personnel, and 37 other employees deemed by the board of directors to be motivated.
Company-level performance assessment goals: For the first time, this incentive plan was awarded in two installments. The corresponding assessment period is the 2024-2025 fiscal year. The trigger value is 2024-2025 deducted net profit of 250/400 million yuan of non-return net profit, and the target value is 2024-2025 deducted net profit of 400/550 million yuan. (Note: The net profit not attributable to mother here is calculated by excluding the impact of share payments under this and other incentive plans)
Impact on the cost side: For the first time, 1,446 million shares were granted, and the total cost to be amortized was 305.47,800 yuan, compared to 1675.16/1143.10/2.3652 million yuan in 2024-2026, respectively.
Comment: The company bucked the trend and invested in scaling up. The current equity incentive plan also set a higher trigger value and target value for net profit deducted from mother, demonstrating the company's confidence in performance development in the next few years and waiting for production capacity to be released and scaled up again. The company's profit in 2023 is under pressure, mainly due to: 1) The gross margin has declined: the product structure has been adjusted, and the revenue share of module products with relatively low gross margins has increased, but the revenue growth of component products that take up a lot of machinery and equipment falls short of expectations. From a customer perspective, the influence of geopolitics has led to a decrease in export revenue with higher gross margins; 2) The cost side has increased: the company reserves talents for factories such as Nantong and Beijing, increases in remuneration costs, and provides equity incentives to employees, leading to an increase in management and sales expenses. In order to meet the needs of downstream domestic customers, the company has invested heavily in R&D, and R&D expenses have increased. As a leader in precision components for domestic semiconductor equipment, production capacity will become one of its competitive barriers. We expect that with the release of scale effects, its profitability will improve.
Profit forecast: We expect 2023-2025 revenue of 20.66/30.43/4.233 billion yuan, yoy +33.78%/+47.29%/+39.10%, net profit to mother of 1.58/3.34/ 451 million yuan, yoy -35.58%/+111.01%/34.93%, corresponding to 24-25 PE of 37/27X.
Risk warning: geopolitical risk, risk of semiconductor cycle recovery falling short of expectations, risk of production capacity release falling short of expected risk, etc.