Event: Goertek adjusts performance assessment targets for the 2023 equity incentive plan
Incentive adjustments highlight confidence in growth and stimulate new momentum for profitability: According to an announcement on June 27, the company plans to adjust the performance assessment indicators of the current long-term incentive plan. The assessment index changed from 2024-2026 revenue of not less than 1064, 1298, and 154.9 billion yuan, respectively, to a new indicator of 2024-2026 revenue of not less than 1064, 1298, 154.9 billion yuan, respectively, or the net profit returned to mother in 2024-2026 increased by no less than 100%, 140%, and 180% compared to 2023, respectively. Judging from the absolute amount, the new index requires net profit to reach 21.8, 26.1, and 3.05 billion yuan in 2024-2026, respectively. The new indicators set a higher net profit growth rate for the next three years, showing that the company is confident that future profits will grow rapidly and profitability will recover. At the same time, increasing the net profit growth index to the mother as an optional standard shows the company's determination to value profit quality. We believe that the implementation of this equity incentive plan sends a positive signal that efforts are being made within the company to repair and improve profitability, and to increase the company's overall net interest rate through product structure optimization and cost control. This move makes the direction of improving profitability more clear and the incentive method more perfect. As the enthusiasm of the core backbone team is effectively stimulated and demand for various types of intelligent hardware picks up, various business segments may continue to achieve breakthroughs, and the company is expected to maintain the growth trend that began in the first quarter in the future.
The XR glasses business is expected to resume high growth and be driven by technological innovation: the company maintains the leading position in the global XR glasses integrated solution, leading the industry from optical components (VR), opto-mechanical systems (AR), core algorithms, to intelligent machine design and manufacturing capabilities, and has long-term in-depth cooperation with major global technology companies. 1) From a short-term perspective, the iterative upgrading of new products and market development for major VR eyewear customers this year is expected to drive a significant increase in shipments; 2) In the era of spatial computing, VR/AR/MR hardware shipments are expected to open up a growth ceiling in the next few years, based on various factors such as the expansion of application scenarios, the improvement of the software and hardware ecosystem, and the entry of more technology giants, and Goertek is expected to continue to lead the development of the industry with its position as a global core supplier.
Product structure optimization, all kinds of smart hardware are expected to fully recover: Product structure optimization, all kinds of smart hardware are expected to fully recover: the company adheres to intelligent manufacturing+precision manufacturing two-wheel drive and builds an industrial ecosystem around the “4+4+n” zero-integration strategy. With the recovery in shipments of various terminal products and the optimization of the product structure, the company's profitability is expected to continue to improve. 1) TWS headphone design and core acoustic components occupy a leading position in the market, and major customer orders and shares are expected to rise steadily. At the same time, product iteration is also expected to help the revenue and profit margin of intelligent acoustic machines increase steadily; 2) Smart hardware such as game consoles, wearables, and smart homes is expected to flourish, and diversification of customers and product types will effectively increase the gross margin level of smart hardware; 3) The company continues to strengthen its layout in the field of microelectronics. MEMS microphones are leading the world, and investment in MEMS smart sensors and SiP advanced packaging processes is increasing At the same time as flexible performance, it is expected to increase the profit margin of the complete machine business.
Profit forecast and investment rating: We maintain the company's 2024-2026 net profit forecast of 23/34/4.5 billion yuan, corresponding PE of 27/19/14 times, respectively, and maintain a “buy” rating.
Risk warning: The development of the VR/AR industry did not meet expectations, and sales of other products fell short of expectations.