Introduction to this report:
The company announced the third phase of the employee stock ownership plan, which continues to cover a wide range of core executives and business backbone to achieve benefit binding.
Key points of investment:
Investment advice: Maintain profit forecasts and “gain” ratings. Maintain the company's 24-26 profit forecast: We expect the company's EPS to be 5.52/5.86/6.21 yuan in 24-26, maintaining the target price of 55.2 yuan and the “increase” rating.
Incident: The company announced the third rolling employee stock ownership plan. The incentives include company directors, supervisors, senior management, as well as middle-level cadres and core employees. The total number of employees intended to participate is no more than 12,000. The total incentive amount is no more than 1.614 billion yuan. The stock source is some of the shares already repurchased in the fourth phase of the company's special repurchase account. The share size is no more than 79,462,095 shares, accounting for about 1.41% of the company's current total share capital. The share purchase price is 20.31 yuan/share, which is approximately 50% of the closing price on August 2, 2024.
This round of incentives is relatively focused on management. The total amount of the current employee stock ownership plan is close to 1.55 billion yuan in the previous round, but the proposed subscription ratio for management has clearly increased, and the total proposed subscription ratio of directors and supervisors has increased from 2.53% to 30%. Referring to the completion of stock transfers in the first and second round of employee stock ownership plans, the ratio of the actual purchase amount to the estimated upper limit has increased. The current employee stock ownership plan is relatively more focused on executive team binding, and overall participation is likely to be higher.
Performance targets are conservative, but there is no change in dividend certainty and high dividend advantage. The current shareholding plan targets a return on net assets of no less than 20% for 2024-2025. Compared with previous periods, the assessment of performance growth rate and assessment of dividend indicators has been reduced. We believe that production and operation are facing more uncertainty, mainly due to major changes in the external environment. Therefore, relative emphasis is placed on ensuring a steady quality of operations under external macroeconomic pressure. Furthermore, according to the company's latest “Shareholder Return Plan for the Next Three Years”, the 2024 cash dividend is still required to be no less than 2 yuan per share or the total cash dividend not less than 50% of the net profit due to mother for the year. Therefore, based on our 24-year profit forecast and 50% dividend forecast, the corresponding current price dividend ratio is still 6.8%, and the company's high dividend advantage remains unchanged.
Risk warning: Increased price competition in the air conditioning industry harms the company's profitability; weakening real estate demand and completion affects post-cycle product demand; rising export tariff risks, etc.