Event: on June 30, the company announced "2019 Stock options and restricted Stock incentive Plan (draft)" and "announcement on the transfer of assets and liabilities related to Fertilizer Additives Business to wholly-owned subsidiaries".
Core point of view: the company starts from the two dimensions of personnel and business to help the transformation and upgrading of digital agriculture strategy:
Personnel dimension: 19-year incentive program for a new generation of middle-level, senior and backbone employees to ensure high performance growth of the company
This incentive plan intends to grant a total of 7 million rights and interests to the incentive object, the underlying stock is A-share common shares, accounting for about 2.42% of the total share capital, 6.3 million shares are granted for the first time. The incentive targets are senior managers, middle managers, core technical (business) personnel and employees who have a direct impact on the company's business performance and future development, a total of 47 people. The incentive plan includes: 1) stock option incentive plan. 4 million stock options are to be granted, 3.5 million are granted for the first time, and the exercise price is 9.99 yuan per share. The performance evaluation requirement of the exercise condition is that the growth rate on the basis of 18-year non-post-deduction net profit in 19-20-21 is not less than 60%, 103%, 170%, and the corresponding net profit after deduction is 0.94 million, respectively. The reserved part requires that the growth rate of the non-post-deduction net profit based on 18-year deduction for the period of 21 / 22 should not be less than 103%, 170%, 238%, and the corresponding net profit after deduction is 1.20 pm, 159 million RMB, respectively. 2) restricted stock incentive scheme. 3 million restricted shares are granted for the first time, and the grant price is 5.00 yuan per share. The performance evaluation requirements of the grant conditions are the same as those of the stock option incentive plan.
The company issued equity incentives three times in 2015, 2016 and 2018. Incentive objects: all are for middle and senior management personnel, core technical and business personnel. Combined with this incentive list, it can be seen that the management of the company has completed the new blood transfusion. Exercise conditions: the exercise conditions of the company's four incentive plans are all combined with the current situation of the company, and the conditions continue to improve, compared with the first-year net profit growth rate of not less than 10% required by the 2015 incentive plan, the requirement for the growth rate of the first year has been raised to no less than 60%. We believe that the uplink channel of the company's employees is smooth, and their efforts are closely related to the company's growth, which forms a good cycle with the continuous acceleration of the company's development, or is expected to promote the company's high performance growth in the long run.
Business dimension: all chemical fertilizer auxiliaries are transferred to subsidiaries, and the parent company coordinates all sectors to transform digital agriculture.
The company plans to transfer the business related to fertilizer auxiliaries to Fubon New Materials, a wholly-owned subsidiary. After the completion of the transfer, the company's business will be adjusted to a holding management platform with strategic planning, resource management and risk control as its main functions, and as a R & D and promotion platform with digital agriculture as the core. Manage the business sectors within the scope of the merger of the company. We believe that the company will reorganize the new business lines of traditional fertilizer auxiliaries and digital agriculture and new fertilizers, which may be conducive to better cooperation among various sectors in the future to help the company achieve the goal of digital agriculture transformation.
Profit forecast and investment advice: we expect that from 2019 to 2021, the company will achieve a revenue of 7.2 billion yuan and a net profit of 1.23 billion yuan. We are optimistic about the expansion of the company's overseas business and the acceleration of the commercialization of digital agriculture to maintain the "buy" rating.
Risk tips: cooperation progress is not as expected, raw material price fluctuation risk, intelligent fertilizer business progress is not as expected, overseas business expansion is not expected, the acquisition of subsidiary goodwill impairment risk.