Incidents:
On March 20, the company announced the 2024 Stock Options Incentive Plan. The number of stock options under this incentive plan was 1,737,500, accounting for 2.96% of the total share capital, of which 1.39 million stock options were granted for the first time, accounting for 2.37% of the total share capital, accounting for 80% of the incentive plan; 364 first-time incentive recipients were granted, with an exercise price of 50.00 yuan/share; 347,500 reserved stock options, accounting for 0.59% of the total share capital, accounting for 20.00% of the total share capital.
Comment:
The implementation of equity incentives shows confidence, and steady development can be expected. According to the equity incentive plan, the performance assessment goals are as follows: based on the 2021-2023 performance average, of which the first exercise target was granted for 24 years for revenue growth of not less than 10% or net profit growth of not less than 20%; for the second phase, the 25-year revenue growth target was not less than 15% or net profit growth of not less than 25%. The first instalment is reserved to target revenue growth of not less than 15% or net profit growth of not less than 25% in 25 years, and the second instalment targets revenue growth of not less than 20% or net profit growth of not less than 30% in 26 years. The implementation of the company's equity incentives and performance goals convey the company's determination for future development and performance growth.
Serving high-quality leading customers in various fields, import substitution & overseas expansion drive the company's growth. Based on the characteristics of small products and large markets for microelectronic welding materials, the company continues to strengthen cooperation with existing high-quality customers and expand new customers. At the same time, we are actively expanding our layout in the field of new energy and photovoltaics, and further deepening cooperation with high-quality customers. The company mainly serves leading customers in the service segment. LED home appliances are the main application areas, while customers in the communications sector include Huawei, ZTE, etc., customers in the photovoltaic sector include Jingke Technology, Jingao Technology, etc., and customers in the field of new energy vehicles include well-known brands such as BYD and Great Wall, adhering to the strategy of positioning and binding leading customers.
Domestic companies represented by Huawei, ZTE, Hikvision, etc. have switched to domestic suppliers of microelectronic welding materials, speeding up the import substitution of electronic welding products, and the company will continue to benefit as a leading domestic manufacturer in the segmented circuit.
Profit Forecasts, Valuations, and Ratings
We expect the company's net profit to be 1.00, 131, and 184 million yuan in 2023-2025, +20.89%/+31.35%/+40.34% year-on-year, corresponding PE of 31, 24, and 17 times, maintaining a “buy” rating.
Risk warning
The risk of developing new products, the risk of fluctuating raw material prices, and the risk that downstream customer expansion falls short of expectations.