Matters:
On April 3 and June 14, 2024, the company announced the granting of restricted shares to incentive recipients of the first and second restricted stock incentive plans in 2024, respectively:
1) On April 3, the company granted 3.0705 million restricted shares to a total of 242 people, including directors, executives, and core technical personnel, accounting for about 4.45% of the company's total share capital, and the grant price was 15.00 yuan/share;
2) On June 14, the company awarded 860 million restricted shares to a total of 8 people, including core technicians and core business executives, accounting for about 1.25% of the company's total share capital, and the grant price was 15.00 yuan/share.
Commentary:
The first phase of equity incentives covers a wide range of areas to help the company achieve long-term strategic goals. According to the company's “2024 Restricted Stock Incentive Plan (Draft)”, the first stock incentive plan was assessed for 3 years, and the company's 2024-2026 operating income and gross margin were assessed. The trigger values were based on the 2023 operating income. The revenue growth rate for 2024-2026 was 20%/45%/75%, respectively, and the gross margin was 25%/28%/30%, respectively, reflecting the company's firm confidence in subsequent business development. The first phase of the incentive plan involved a total of 242 people, accounting for 67.22% of the company's total 360 employees (as of December 31, 2023). The incentive plan covers a wide range of topics, which will strongly attract and retain outstanding talents, fully motivate employees, improve the company's operating efficiency, and help the company's long-term development.
The goals of the second-phase equity incentive target are clear, demonstrating the company's confidence in developing new products. According to the company's “2024 Second Restricted Stock Incentive Plan (Draft)”, the assessment period for the second phase of the stock incentive plan is 4 years. The company's 2024-2027 “operating income and gross profit” of the company's 2024-2027 “battery management chips, signal chain chips, and automotive lighting chips” were assessed. The trigger values were 500/3600/9500/175 million yuan respectively, and gross profit was 225/1400/40/72 million yuan respectively (corresponding gross margin was 45.00%/ 38.89%/42.11%/41.14%). The incentive target of the second phase of the incentive plan is a total of 8 core technical personnel and business executives. The targeted equity incentive policy is expected to further increase the motivation of technical and business cadres and accelerate the development and development of the company's new products.
Cyclical recovery helps repair the company's short-term performance and broadens the product layout to open up room for long-term growth. The company actively broadened its product matrix and strategically focused on high-margin products. 2024Q1 performance achieved steady growth and significant improvement in profitability. The company's new product layout is progressing smoothly. Among them: in terms of BMS, for 200-800V high-voltage applications, the company is actively developing and supporting daisy chain cascaded BMS AFE chips; in terms of signal chains, the company has laid out products such as amplifiers, converters, sensors, isolation chips and interface chips; in terms of automotive lighting, the company can provide single-chip integrated multi-channel LED driver chips. Currently, samples of LED taillight driving products have begun, and headlamp lighting products are also being fully developed. In the future, as the industry cycle recovers and the company's new products continue to be released, performance and profitability are expected to continue to improve.
Investment suggestions: Demand for terminals is gradually picking up, domestic substitution is advancing at an accelerated pace, and the company continues to broaden its product layout to open up room for long-term growth. We maintain the company's 2024-2026 net profit forecast of 0.24/0.55/ 0.95 billion yuan, and the corresponding EPS of 0.35/0.80/1.38 yuan, maintaining the “recommended” rating.
Risk warning: Industry competition intensifies; new product development progress falls short of expectations; downstream demand falls short of expectations.