Event: The company released the 2024 Stock Options Incentive Plan (draft): The number of stock options to be granted to incentive recipients is 3.55 million, accounting for 2.3% of the company's current total share capital. For the first time, a total of 1,310 people were awarded incentives, mainly including core management and technical personnel.

The company also announced the 2025-2026 employee stock ownership plan (draft): the scope of implementation of the plan includes: directors, senior management, company general manager, central general manager, and assistant general manager. The total number is expected to be no more than 29.

A stock option incentive plan was launched to guarantee the company's long-term development. The company announced the 2024 stock option incentive plan (draft): it is proposed to grant 3.55 million shares of restricted shares, accounting for 2.3% of the company's total share capital; 3.373 million shares will be granted for the first time, and 0.178 million shares will be reserved; the grant price is 106.0 yuan/share, at a 17.5% discount compared to the current price; 1,310 people will be awarded for the first time, mainly core management personnel and core technical (business) personnel. The 2024-2027 stock option cost amortization amount is expected to be 0.13/0.047/0.025/0.011 billion yuan, respectively.

Company-level 2024-2026 performance assessment requirements: 2024 revenue should not be less than 14 billion yuan; 2024-2025 cumulative revenue should not be less than 30.5 billion yuan; 2024-2026 cumulative revenue should not be less than 50.5 billion yuan. We believe that the company's move will help attract and retain outstanding talents, fully motivate core personnel, and ensure the long-term development of the company.

Furthermore, employee stock ownership plans are tied to the accelerated development of talents. This employee stock ownership plan is a medium- to long-term incentive policy. The plan is to launch two consecutive years, and two separate employee shareholding plans will be set up on a rolling basis from 2025 to 2026. The number of participants is expected to be no more than 29, covering core management personnel including company directors and senior management. The assessment target is no less than 14 billion yuan in revenue for 2024; the cumulative revenue for 2024-2025 will not be less than 30.5 billion yuan. The current employee stock ownership plan lasts for a long time, helping the company to fully mobilize the enthusiasm of core cadres and employees and improve operating efficiency.

The sword refers to the world's leading Powersport two-wheel four-wheel drive. (1) Motorcycles: The company started with high-displacement street cars, and is deeply involved in the field of simulation and cruising. The export sales volume of 2022/2023/2024H1 motorcycles was 0.046, 0.075, and 0.068 million units respectively, up 72.0%/63.4%/81.2% year on year.

In 2024, the company is expected to maintain a high export growth rate with a richer supply of models; (2) All-terrain vehicles: Dig deeper into the US market, continue to optimize the product structure, and steadily increase the sales share of high-value-added products. Optimistic about the company's medium- to long-term product line expansion (high-end U/Z series) and cost performance advantages will continue to increase market share.

Investment advice: We are optimistic about the company's two-wheeler exports and four-wheel high-end layout in the long term, and maintain profit forecasts. We expect the company's 2024-2026 revenue to 15.2/19.59/23.7 billion yuan, net profit to mother of 1.323/1.729/2.095 billion yuan, and EPS of 8.74/11.42/13.83 yuan. Corresponding to the closing price of 128.41 yuan/share on August 6, 2024, PE was 15/11/9 times, respectively, maintaining the “recommended” rating.

Risk warning: Competition in the motorcycle market intensifies; the company's new product sales fall short of expectations; fluctuating shipping costs; fluctuating exchange rates, etc.