The readings of this report are as follows:
The company announces that it intends to carry out equity incentives, which will help to fully mobilize the enthusiasm of employees, promote the steady growth of enterprises, and maintain the rating of increasing holdings.
Main points of investment:
Maintain the overweight rating. We believe that volume procurement is expected to accelerate the concentration of China's orthopaedic industry, and the company is a leader in multi-product lines. The equity incentive scheme is expected to help the company maintain steady growth and maintain the forecast EPS1.45/1.84/2.31 of 2020-2022. Considering the decline in the valuation level of comparable companies, the target price of PE45X, in 2021 has been lowered to 82.80 yuan and the overweight rating has been maintained.
Equity incentive covers a wide range and is expected to mobilize the enthusiasm of the core team. The company's 2021 restricted stock incentive plan (draft) is proposed to be awarded to 574 directors / senior managers, core managers and core technical (business) personnel, with a total of 3.862 million restricted shares, accounting for 0.96% of the company's total share capital. Among them, 3.2827 million shares (0.82%) are awarded for the first time, with a wide range of incentives, which is conducive to fully mobilize the enthusiasm of the core team.
The ban on the first grant plan is lifted in three phases, and the impact of equity incentive fees on performance is limited. The period of partial lifting of the sales restriction for the first grant is respectively months from the date of completion of the registration of the grant, with a corresponding ratio of 30%, 30%, 40%, and the price of the first grant is 26.08 yuan per share. According to the preliminary calculation, the total amortization cost of the first grant part is 85.6128 million yuan, and the total amortization cost from 2021 to 2025 is 1997.63, 2996.45 and 2140.32, respectively, which has a limited impact on the overall profit of the company.
The assessment goal is challenging to some extent, and the orthopedic leader is expected to continue to grow steadily. The performance evaluation target is based on the net profit value of 2021 (excluding the influence of equity incentive fees). The growth rate of non-parent net profit from 2022 to 2024 is not less than 24%, 55%, 95%, respectively, which is challenging. In the context of volume procurement, the company is actively expanding dentistry, minimally invasive surgery, orthopaedic joints and other fields, equity incentives contribute to the realization of the company's strategic goals, and are expected to continue to grow steadily.
Risk hint: with volume purchase price reduction than expected risk, new areas of expansion is not as expected risk.