Incident: The company recently issued an incentive award announcement. Based on the company's recent situation and our tracking, the comments are as follows:
Incentives have been granted, and three-year equity and restricted stock incentives have highlighted the company's management's confidence in long-term development. The board of directors of the company agreed that the initial grant date for the stock options and restricted stock incentive plan to be granted earlier will be June 13. 471 management and core technical personnel will be granted 6.730 million shares of stock options for the first time at an exercise price of 15.32 yuan/share, and 12.140,500 restricted shares will be granted to 419 management and core technical personnel for the first time, at a price of 9.39 yuan/share. The incentive assessment target is based on 23 year revenue or net profit to mother, and the 24-26 growth rate targets are 15.0%/32.3%/52.1%, respectively. Converted, the 24-26 revenue targets were 123.71/142.32/16.361 billion, respectively, and the net profit target to mother was 10.76/12.38/1,423 billion, respectively, with an annual growth rate of 15%. The total cost to be amortized for the initial award of incentives was $269 million, and the 24-27 costs were 0.96/1.16/0.45/12 million, respectively.
In the short term, Q2 performance is expected to continue its high growth trend and actively monitor new business growth developments for N customers. Q2 The company's overall operating rate improved month-on-month, the product structure was further optimized, and the company's management successfully predicted upstream CCL price trends and strengthened supply chain and inventory management. The cost side remained relatively stable, and the company's performance is expected to continue to grow. Looking at various businesses, on the AI computing power side, along with the company's continuous introduction and mass production of new products for N customers and the continuous promotion and introduction of domestic customer projects, the increase in the penetration rate of the EGS/Genoa platform is expected to usher in volume growth; demand in the consumer electronics business continues to pick up; the fields of new energy vehicles and photovoltaic energy storage maintain a rapid growth trend; and industrial control and medical care grow steadily.
Looking at the medium to long term, the company's excellent management and the release of high-end production capacity for automobiles and digital communication have opened up a new round of growth space.
The company's high-end upgrade strategy is progressing steadily. The high-multi-layer, HDI and SLP production capacity projects in the field of hard boards are progressing smoothly. New breakthrough progress has been made in high-end product development for downstream European, American, N and domestic H computing power customers, and leading automotive T1 customers such as Bosch and Denso. It is hoped that it will continue to receive high-margin orders and drive rapid growth in performance. It is worth noting that the company is cooperating with N customers to develop new projects, which is expected to contribute to flexible performance next year. We are optimistic about the company's excellent management capabilities. High-end production capacity upgrades for automobiles and digital communication will open up room for medium- to long-term performance and valuation.
Maintain a “Highly Recommended” rating. Considering factors such as good downstream demand in Q2, continuous improvement in the operating rate, the company's extensive downstream application fields, excellent technology and customer card slots, continuous introduction and release of high-end production capacity, and equity incentive expenses, etc., we raised 24-26 revenue to 125.9/144.7/16.65 billion, and net profit to mother to 13.3/16.2/1.97 billion. The corresponding EPS was 1.57/1.92/2.34 yuan, corresponding PE was 16.6/13.6/11.2 times, maintaining “strong” “Recommended” rating.
Risk warning: Industry demand falls short of expectations, competition among peers intensifies, capacity release progress falls short of expectations, and the risk of raw materials rising.