Event: The company announced stock option incentives and employee stock ownership plans for 2024.
① Unlock target: Target A: In 2024/2025/2026, the company's tax-inclusive revenue reached 115/150/20 billion yuan respectively (corresponding compound growth rate of about 32% in 24-26); Target B: 2024-2026 net profit reached 400 million yuan.
② Number of incentives: The number of underlying shares to be held by the employee stock ownership plan is no more than 1.9815 million shares, accounting for about 0.49% of the total current share capital (0.45% of the initial subscription, reserved about 0.05%); the number of stock options is 2,438,600 shares, accounting for about 0.61% of the current total share capital (0.55% for the first time, reserved 0.5%).
③ Purchase price: The employee stock ownership plan is 12.01 yuan/share; the stock option exercise price is 24.02 yuan/share.
④ Amortization expenses: Employee stock ownership plan, amortization expenses of 703.65/974.28/378.89/1.082,500 yuan for 24-27 years, respectively. Stock options require amortization of 190.6/287.26/142.85/461,900 yuan in 24-27 years, respectively.
⑤ Motivating persons/stock sources: 96 core executives. The employee stock ownership plan is a special account for repurchase.
Comment:
The rapid growth rate of revenue assessment targets fully demonstrates the company's confidence in development driven by high-end cost performance strategies. Profit targets are set more to guarantee the achievement of incentives for employees. The total amount of incentives accounts for 1.1% of the current total share capital. The amount is sufficient, and the incentive effect is expected to be good. The annual amortization fee is low, and we anticipate limited impact on profitability.
The development potential is upward, driven by a high-end cost performance strategy, and the target of 20 billion dollars in three years can be expected. The company's supply chain optimization has achieved remarkable results, and the competitive advantage of the product cost ratio is outstanding. Second, the three squirrels have been operating for many years to build a brand mentality. “Brand mentality+cost performance”, or high-end cost performance strategy, is expected to create a higher level of competitive advantage, and the “20 billion in 3 years” development target can be expected.
Profit forecast and investment rating: Looking ahead, the company proposed a return target of 10 billion dollars in 24 years. This incentive proposed a target of 20 billion dollars in 3 years, which fully demonstrates the company's confidence in development. Driven by a high-end cost performance strategy, the efficiency upgrade of the company's back-end supply chain has achieved remarkable results, which is expected to drive upward omnichannel development.
Online, Douyin has opened up large-scale entrances, and the “Shak+N” strategy is expected to drive the growth rate of all online platforms; offline, New Year's gift boxes have verified the effectiveness of the company's brand mentality and cost performance strategy in the nut category, and the offline daily sales channel can also be expected to grow rapidly in the future. On the profit side, with continuous supply chain optimization and scale effects, the company's profitability is also expected to continue to improve. We expect the company's 24-26 earnings per share of $1.02, 1.52, and 2.15, maintaining the company's “buy” rating.
Risk factors: price increases for raw materials such as nuts, increased online competition, offline expansion falls short of expectations, and food safety issues.