Introduction to this report:
The company issued an equity incentive plan to better attract and retain outstanding talents. The higher exercise price reflects the company's confidence in the future and is optimistic about the future development of the company's securities business.
Incidents:
On November 14, 2023, the company released the “Compass 2023 Stock Options Incentive Plan (Draft)”. The number of stock options to be granted under the incentive plan is 8.1293 million, accounting for about 1.99% of the company's total share capital at the time of the announcement of this incentive plan, and the exercise price of each stock option granted is 59.20 yuan.
Commentary:
Investment suggestions: The company's introduction of equity incentives shows confidence and optimism about the future development of the securities business. It maintained 2023-2025 revenue of 1,073/16.04/2.189 billion yuan, net profit of 1.32/2.71/473 billion yuan, and corresponding EPS of 0.32/0.67/1.16 yuan. Maintain the “increase in holdings” rating and maintain the target price of 70.96 yuan, corresponding to 61xP/E in 2025.
In order to further establish and improve the company's long-term incentive and restraint mechanism and attract and retain outstanding talents, the company launched this equity incentive plan. The company has launched two equity incentive plans before, and the 2021 incentive plan entered the second exercise period in June 2023. The exercise price was lower than the stock price during the exercise period, which had a good incentive effect. The 2022 incentive plan is also being implemented normally. The current equity incentive plan is also being implemented normally. On the basis of the previous two, the current equity incentive plan further improves the company's long-term incentive mechanism to attract and retain outstanding talents.
Equity incentives focus on evaluating revenue and securities brokerage business, and the higher exercise price shows confidence. The performance assessment requirements for equity incentives at the company level this time are: the first exercise period, based on 2023, the total operating income growth rate in 2024 should not be less than 12%, or the net income growth rate of handling fees and commissions should not be less than 50%. In the second exercise period, 1) Based on 2023, the growth rate of total operating income in 2025 is not less than 26%, or the net income growth rate of fees and commissions is not less than 125%. 2) Based on 2024, the growth rate of total operating income in 2025 is not less than 12%, or the net income growth rate of fees and commissions is not less than 50%. The focus is on assessing revenue and securities economy business. The market price of the exercise price before the announcement of the reference incentive plan was set at 59.20 yuan. Compared with the 1.5% premium on the closing price on the day of the announcement, the higher exercise price shows the company's confidence.
Equity incentives motivate employees and are optimistic about the future development of the company's securities business. The company's equity incentives bind the interests of employees to the interests of the company and motivate employees. In the fourth quarter, the company will focus on centralized sales of the High-End Product All-Win Decision Smart Alpha Edition and the Mid-range Product Battle Dragon Edition. Performance is expected to pick up. The company is also continuing to promote the development of the securities business. Based on a deep understanding of the needs of customers to increase the expected yield, the company has built strong marketing capabilities, which is expected to exceed expectations in the conversion rate of the securities business, and is optimistic about the future development of the securities business.
Risk warning: The capital market fluctuates greatly, and the company's securities business falls short of expectations.