Incident: The company released a draft equity incentive plan to grant 18.1111 million stock options to the incentive recipients. The first incentive was granted to 195 people (3.6% of the total number of people), including company directors, senior management, and core management, business and technical backbone.
The exercise price and exercise conditions are excellent, demonstrating the company's confidence in development
1. The exercise price of the first stock option granted is 12.59 yuan/share 2. Conditions for exercise performance:
1) Based on the average net profit deducted from 2020 to 2022 (RMB 0.24 million), the compound net profit growth rate for 2024-2026 is not less than 180%, 124%, 90%, and higher than the peer average or 75% of the target companies;
2) The 2024-2026 return on net assets ROE is not less than 4.26%, 5.84%, 6.36%, and higher than the peer average or 75% of the target company;
3) The value of improvement in economic value added in 2024-2026 is greater than zero.
4) Assessment requirements: three periods of administration
3. Impact of share payment fees: Assuming that the grant date is February 2024, the total amortization expenses will be RMB 63.407 million. 2024-2028 will affect 2092/2282.7/1323.6/597/450,000 yuan respectively. Regardless of the positive effects of equity incentives on operations, expenses will have a certain impact on net profit.
In summary, we calculated the 2024-2026 target deductions of $188, 2.7, and 313 million yuan. Overall, we believe that this equity incentive will fully mobilize the enthusiasm of the company's core personnel and reflect the company's full confidence in future operations. We are firmly optimistic about the company's future growth.
Investment advice
The company continues to expand in the field of new materials, has obvious technical advantages in the UTG field, and later has a large domestic replacement capacity. Due to the current downturn in the downstream display business and a drop in the prices of some new material products, we raised the company's 24-25 profit forecast based on the exercise conditions in equity incentives. The company's net profit for 23-25 years is estimated to be 1.11/2.7/420 million yuan (previous value 1.32 /99/330 million yuan), corresponding to PE 107/44/28.6 times, maintaining the “buy” rating.
Risk warning: downstream demand falls short of expectations, UTG phase II production capacity investment falls short of expectations, high-purity synthetic quartz sand product verification falls short of expectations