1. Event: The company released the 2019 Restricted Stock Incentive Plan. The plan plans to grant 2,438 million restricted shares to incentive recipients, accounting for 0.600% of the company's total share capital on the day the plan was announced. Of these, 2.266,000 shares were granted for the first time, and 172,000 shares were reserved. A total of 65 people were incentivized, including 34 executives and core managers, and 31 core business executives. The initial grant price for restricted shares is 14.03 yuan/share. 2. Our analysis and judgment (1) The scope of equity incentives is extensive, and the talent incentive mechanism is gradually improved. In March 2019, the company launched a restricted stock incentive plan. The plan is to grant 2,438 million restricted shares to incentive targets, accounting for 0.600% of the company's total share capital during the reporting period. The grant price is 14.03 yuan/share. Among them, 2,266,000 shares were granted for the first time, accounting for about 0.558% of the company's total share capital, 92.95% of the total number of restricted shares granted under this plan, and 172,000 shares reserved, accounting for about 0.042% of the company's total share capital, accounting for 7.05% of the total number of shares granted under this plan. The incentive targets 65 people, including company directors, senior management, core management, and core business backbone. If the incentive target is company executives and core managers, the conditions for lifting the restrictions are that the company's revenue in 2019-2022 is not less than 13.98, 16.14, 18.78 billion yuan, and 2.190 billion yuan, respectively; for the incentive target for the core business, the conditions for lifting the restrictions are that the company's revenue in 2019-2020 is not less than 13.98 billion yuan and 1,614 billion yuan, respectively. After meeting the conditions for lifting the limit, the individual lifting factor is determined based on the performance evaluation. Our understanding of this incentive plan is as follows: (1) The scope of incentives is broad. A total of 65 people were targeted for this incentive. The scope of incentives covered company directors, executives, core managers and core business backbone, and the scope of incentives was quite extensive. (2) The aim is to motivate talents, effectively combine the personal interests of shareholders, companies and operators, and help the company develop in the long term. Comparing the company's revenue performance this year, the conditions for lifting the restrictions are not strict. Completing the performance assessment on time is a probable event. The actual purpose is to motivate the motivators, tie the individual interests of the core team with the company's development, and improve operational efficiency. It also shows the importance that the company attaches to talents, which helps attract more talents to join. (3) Incentive amortization expenses have little impact on performance. If granted in March, the corresponding amortization expenses for 2019-2023 were 1419.1, 1001.2, 502.2, 225.9, and 313,000 yuan, respectively, for a total of 31.797 million yuan. The impact on performance was not significant, and the performance release brought about by equity incentives was far higher than the increase in amortization expenses. (2) Performance is growing steadily, and the terminal layout continues to promote the steady growth of the company's overall business performance. According to the performance report, in 2018, the company achieved revenue of 1,213 billion yuan, an increase of 15.20% over the previous year, and realized net profit of 318 million yuan, an increase of 5.68% over the previous year. At the end of the reporting period, the company's total assets were 2,314 billion yuan, an increase of 0.77% over the same period last year. We believe that the main reason for the continued growth rate of the company's performance was that the company's strong decline in sales channels in the early stages, and the company's product layout continued to advance in the three major terminals of hospitals, primary schools, and pharmacies. The major hospital market adheres to brand-driven academic marketing strategies, increases academic marketing efforts, and continues to promote enterprises and product brands. On the one hand, we are continuously improving high-level evidence-based medical evidence, promoting the clinical value of products in the treatment of related diseases, and providing customers with better clinical plans; on the other hand, increasing efforts to launch new products and completing preparations for multiple new product launch meetings, laying the foundation for rapid coverage of new products. The grassroots market adheres to academic leadership, accumulates product research evidence, and supports sales promotion and product development. Continue to expand terminal coverage to promote further sales growth. The retail market, on the one hand, closely revolves around the pain integration brand development strategy, increases Qizheng's brand building efforts, and enhances brand influence; on the other hand, it accelerates the pace of new product launches. During the reporting period, the company became the official strategic partner of the 2018 Lanzhou International Marathon, providing professional integrated solutions for musculoskeletal pain for the event. Qizheng meridian exercises with Tibetan cultural characteristics are developed for skeletal muscle protection, and are being thoroughly disseminated and promoted among consumers. The Qizheng brand was selected for the first China Independent Brand Expo hosted by the Development and Reform Commission, the Propaganda Department of the Central Committee, the Ministry of Commerce and the General Administration of Market Supervision and Administration, which focused on showcasing the development history of the Qizheng brand being rooted in Tibet for 23 years; the Qizheng Pain Relief Patch was successfully selected for the “China First OTC Brand Month Promotion Brand” campaign, and collaborated with outstanding brands in the industry to carry out charity communication to help the public learn more about the brand drugs around them. At the same time, the company continues to push ahead with preparations for the launch of new integrated pain products, enrich category structure reserves, and further increase the coverage rate of second-tier new products. (3) Be optimistic that the new strategy of “one axis, two wings, three supports” will drive steady growth in the company's performance. In 2018, the company's operations closely revolved around the strategic initiative of “one axis, two wings, three supports”, and continued to strengthen core competitiveness in all areas. “One axis” is to use strong pain relieving paste. Through the three-wheel drive of major hospitals, basic drugs, and retail, the continuous growth of pain relieving paste has been achieved. “Two Wings”, on the one hand, provides patients with clinically valuable specialty treatments and a portfolio of classic prescriptions through a rich product line of pain categories; on the other hand, it focuses on neurological rehabilitation and the maternity and skin markets. “Three supports” refers to marketing model innovation, capital operation, and the construction of an EMU organization including data, information, operation, talent, and mechanism building. The company focuses on the pharmaceutical business and continuously strengthens core competitiveness such as product advantages, brand advantages, marketing advantages, R&D advantages, and resource advantages: (1) in terms of product layout, the company continues to enrich product types, optimize product structure, and accelerate the achievement of breakthroughs from a single variety to multiple varieties and multiple gradients; (2) in terms of brand building, the company is patient-centered to enhance customer experience. Strengthen interaction and communication with key customers, enhance customer stickiness, and increase brand awareness; (3) In terms of building marketing advantages, we rationally coordinate omni-channel development and multi-channel collaboration through diversification of investment forms to further promote academic marketing; (4) in terms of R&D, during the reporting period, the company's R&D expenses were 21.31 million yuan, an increase of 39.76% over the previous year. R&D efforts continued to be strengthened. The company strives to promote clinical product research and standard research on Tibetan medicinal materials, while also enriching the company's product line. 3. Investment advice The company is a leading Tibetan medicine company. Looking forward to the future, first-tier pain relievers are expected to rely on a perfect sales channel layout to maintain a relatively rapid growth rate; second-tier types of ointments and pills are expected to continue to gain strength, achieving rapid performance growth through the three drivers of major hospitals, basic medicines, and retail. Furthermore, the company is vigorously promoting brand building and enriching the product category structure. Future development is worth looking forward to. We have appropriately raised our profit forecast. The estimated net profit for 2018-2020 is 3.46/3.93/445 million yuan, corresponding to EPS of 0.85/0.97/1.10 yuan, and corresponding PE of 30/27/23 times, respectively. Maintain a “Cautious Recommendation” rating. 4. Risk indicates the risk of drug price reduction, and the progress of new product marketing falls short of expectations
奇正藏药(002287):推行股权激励 激励机制逐步完善
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The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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