Event: the company announced that it intends to grant 2.7067 million restricted shares to 104 incentive targets (directors, executives, core technical personnel, middle managers, technical backbones, business backbones), accounting for about 3.50% of the company's total share capital of 77.334 million shares at the time of the announcement of this draft incentive plan.

Incentives are widely conducive to the long-term growth of the company: the incentive object of the equity incentive plan accounts for about 8.78% of the total number of employees of the company, the incentive scope is wide and strong, and the incentive is widely conducive to the long-term growth of the company. The company sets two assessment indicators for this restricted stock incentive plan, namely, the annual operating income growth rate (relative to 2021) and the annual data operating service income, and sets the target value and trigger value respectively. The trigger value of the annual operating income growth rate is that the growth rate of the company's operating income from 2020 to 2023 is not less than 18.00%, 40.50% and 67.50% respectively. The target value is that the growth rate of operating income of the company from 2021 to 2023 is not less than 20.00%, 45.00% and 75.00% respectively compared with 2020. The trigger value of the annual data operation service income is that the annual data operation service income of the company from 2021 to 2023 is not less than 277,3.6 and 450 million yuan; the target value is that the annual data operation service income of the company from 2021 to 2023 is not less than 300 million yuan, 400 million yuan and 500 million yuan; the performance evaluation target shows the company's confidence in development.

The company's 20-year revenue and newly signed orders increased rapidly: in 2020, the company realized revenue of 681 million yuan, an increase of 32.37% over the same period last year, a net profit of 177 million yuan, an increase of 48.88% over the same period last year, and a net profit of 142 million yuan, an increase of 30.11%. In 2020, the company signed new orders of 1.009 billion yuan, an increase of 65.46% over the same period last year. According to the contract amount, the company's on-hand orders totaled 819 million yuan by the end of 2020, an increase of 23.68 percent over the same period last year. Thanks to the growth of smart environmental protection business and smart city business, the company's operating income, net profit and the amount of newly signed orders all increased significantly. From the perspective of business, the revenue of perception and platform construction was 439 million yuan, an increase of 125.74% over the same period last year, while that of data operation services was 231 million yuan, an increase of 9.55% over the same period last year. Over the past 20 years, the company's overall gross profit margin has dropped by 4.66 percentage points to 43.63%. This is mainly due to the country's recent advocacy of new infrastructure, resulting in a rapid increase in the proportion of revenue from the perception of the main business and the construction of the platform. in the new infrastructure projects, most of them are general contracting business. there are more purchase and access costs of third-party smart equipment, which leads to the reduction of project gross profit margin and the change of operating net cash flow in the short term. But at the same time, in the data operation after the completion of perceptual construction, the company can also get better third-party equipment access capacity and subsequent years of data operation income.

Earnings forecast, valuation and rating: because the equity incentive plan still needs to be approved by the shareholders' meeting, there is some uncertainty, so the impact of amortization of equity incentive expenses on the company's performance will not be considered for the time being. Taking into account the large number of orders on hand, the company slightly raised its 21-22 net profit forecast to 2.07 yuan and 251 million yuan respectively (0.49% and 0.80% respectively), and forecast 23-year net profit of 302 million yuan. Maintain "increasing holdings"

Rating.

Risk tips: the risk of high customer concentration, large amount of accounts receivable, long age, lack of liquidity and so on.