Matters:

The company launched a draft employee stock ownership plan for 2024. It is intended to cover no more than 305 core personnel and grant no more than 5.2524 million shares at a grant price of 40.62 yuan per share, accounting for about 0.99% of the company's total share capital.

The assessment target is based on revenue or performance deduction for 2023. If awarded before the three-quarter report in '24, the 24/25 revenue or deducted non-performance growth rate will not be less than 10%/20%; if awarded after the three-quarter report in '24, the 25/26 revenue or deducted non-performance growth rate will not be less than 20%/30%.

Commentary:

Equity incentives will be promoted, and it is expected that they will be introduced on a regular basis in the future. The company plans to provide shareholding incentives for no more than 305 core technical and business personnel at an award price of 40.62 yuan/share, for a total of approximately 5.252,400 shares. The incentives for this employee stock ownership plan are strong. On the one hand, the number of people covered and the number of shares granted were significantly higher than the previous round of equity incentives (194 people in 23, with a total of 2.502 million shares granted); on the other hand, if calculated at the closing price of 71.21 yuan per share on the day of the announcement, the corresponding person could receive a stock market value of about 1,226,000 yuan. We believe that this incentive is not only conducive to attracting and retaining core talents, fully mobilizing the enthusiasm of the company's employees to improve overall operating efficiency, but is also a reflection of the company's sound and long-term incentive mechanism. In the future, it is expected that incentives will continue to be introduced on a regular basis to effectively combine shareholders' interests, company interests, and employees' interests to seek the long-term development of the company.

The assessment is based on steady growth to achieve employee equity ownership. The current employee stock ownership plan assessment is based on 2023 income/performance. If awarded before the three-quarter report in '24, the assessment target is a 24/25 revenue or non-performance growth rate of not less than 10%/20%; if awarded after the three-quarter report in '24, the assessment target is a 25/26 revenue or deducted non-performance growth rate of not less than 20%/30%, which is 50% for each period. According to the assessment target, the corresponding 24-26 year revenue or performance growth rate is 10.0%/9.1%/8.3%. At the same time, the estimated amortization expenses for 24-26 years are 4684.07/ 6141.42/ 1526 million yuan respectively. We believe that it is basically safe to achieve the expected goals in the context of continued improvement in the company's operations. The current assessment is more about anchoring the lower limit of growth in the short to medium term, and ensuring the ownership of employees' equity and the implementation of the company's incentive mechanism.

Incentives gather people's hearts and minds, and it is a key step in reform. In the previous review, we clearly pointed out that at present, internal changes within the company are being actively promoted. The energy storage+security business continues to grow rapidly after focusing on categories in the short term, while further increasing operating investment in emerging markets such as Australia, New Zealand, Southeast Asia, etc., and the development and integration of European offline markets has also led to steady growth in other categories. Looking at the medium to long term, on the one hand, Anke is working with top laboratories in the industry to continue to advance the research and development of large AI models, which may later reduce costs and increase the efficiency of internal operations and iterative innovation in the product business; on the other hand, in terms of business lines, the company is still actively exploring potential emerging categories, and forward-looking strategic layout preparations are also expected to contribute new growth points. Although the market still has some doubts about Anke's growth certainty and long-term confidence, we believe that the inertial growth with current category focus and market development will be sufficient to support the expansion of business potential for the next 2-3 years. If the AI model relays drive growth with other potential business categories, the room for long-term imagination can be further opened up. At present, it is still a high-quality target with high investment value.

Investment suggestions: The company continues to implement increases in various categories, regions, etc., and operations are clearly improving, and subsequent growth is worth looking forward to. Taking into account the recent increase in the company's share capital, we adjusted the EPS forecast for 24/25/26 to 3.83/4.66/5.57 yuan (previous value 4.85/5.86/7.03 yuan), corresponding PE was 19/15/13 times. Referring to the DCF valuation method, we adjusted the target price to 85 yuan, corresponding to 22 times PE in 24 years, maintaining the “strong push” rating.

Risk warning: macroeconomic fluctuations, increased industry competition, category adjustments and market development fall short of expectations.