Incident: On June 1, the company released the “2024 Stock Options and Restricted Stock Incentive Plan (Draft)”. The plan plans to grant a total of 6110 million shares to incentive recipients, accounting for 2.33% of the company's total share capital of 2617.02.44 million shares at the time the plan was announced.
It is proposed to implement an equity incentive plan to boost employee confidence and help the company develop in the long term. The company issued the “2024 Stock Options and Restricted Stock Incentive Plan (Draft)”, which plans to grant a total of 611 million shares to 242 people working in the company (including subsidiary companies, same below) when announcing the incentive plan, accounting for 2.33% of the company's total share capital of 2617.02.44 million shares at the time the plan was announced; it is proposed to grant 2.1 million stock options to incentive recipients, accounting for 0.80% of the total share capital of 261.702 million shares at the time of the announcement of the plan; The incentive target was granted 4.01 million restricted shares of the company, accounting for 1.53% of the company's total share capital of 261.701.44 million shares at the time the plan was announced. This draft equity incentive plan will boost the confidence of the company's employees, bind the company's performance development to employees' interests, and drive the company to achieve long-term development goals. The draft equity incentive plan sets the assessment goals for 2024-2026 as follows:
1. 2024: Based on 2023 operating income, 2024 operating income increased by no less than 30% ($2,791 million); or based on 2023 net profit, net profit increased by no less than 30% ($84 million) in 2024;
2. 2025: Based on operating income in 2023, operating income in 2025 increased by no less than 60% ($3.435 billion); or based on net profit in 2023, net profit increased by no less than 60% ($103 million) in 2025;
3. 2026: Based on 2023 operating income, 2026 operating income increased by no less than 90% ($4,079 million); or based on 2023 net profit, net profit increased by no less than 90% ($123 million) 1.
Build a comprehensive computing power module product layout to enable the development of AI and terminal scenarios. The company is committed to deepening the development of high-computing power module technology and product layout. It pioneered computing power concepts such as high-computing power AI modules, large AI models, and multi-sensing integrated VSLAM solutions in the industry, and played a key role in promoting the development of end-side AI. At the same time, the company's product matrix is complete, including 4G/5G, REDCap, AI computing power, LTE Cat.1/4/6, NB-IoT, Wi-Fi, NTN, etc. The multi-network module product matrix creates a full-stack IoT connectivity ecosystem, which can meet the needs of multi-scenario applications and help various IoT terminals connect quickly and smoothly. With the rapid development of artificial intelligence technology represented by generative AI, the adoption rate of edge artificial intelligence has increased significantly. The MeiG intelligent high computing power AI module can provide 0.2 to 48 tops of different levels of hardware computing power, and can successfully run large models with multiple parameters up to 7 billion, such as LLama and Tongyi Qianwen, which fully meets the computing power requirements of AIGC applications2.
Profit forecast and investment rating: We expect the company's 2024-2026 net profit to be 1.21/1.70/204 million yuan, and the 2024-2026 EPS will be 0.46/0.65/0.78 yuan, respectively. The PE corresponding to the current stock price will be 48/34/29 times, respectively. As the company's computing power module technology continues to be upgraded and iterated, we are optimistic about the company's future performance development and maintain a “buy” rating.
Risk warning: industry competition increases risk; risk of macroeconomic fluctuations; risk of product quality control; risk of exchange rate.