Main points of investment:
Company announcement: the company issued the 2021 equity and restricted stock incentive plan, which intends to grant 1.9217 million shares per share to a total of 57 incentive targets, accounting for 1.66% of the total share capital. Among them: 1) 892800 stock options (accounting for 0.77% of the total share capital) are proposed to be granted to the four core management, and the exercise price is 54.25 yuan per share; 2) 1.0289 million restricted shares (accounting for 0.89% of the total equity ratio) are proposed to be granted to 53 middle and senior managers and key employees, and the grant price is 27.13 yuan per share. The company has implemented a restricted stock incentive plan in 2019, which is still valid, and the company's incentive system is perfect.
Equity incentive shows the confidence of the company and improves the certainty of performance. The targets of this incentive program include Mr. Wang Mingxi, Chairman / General Manager, Ms. Huang Yichao, Deputy General Manager / Dong Secretary, as well as other core staff such as directors, senior managers and middle managers. Among them, the exercise conditions: the waiting period / restriction period after the grant is 12-24-36 months respectively, and the corresponding exercise / lifting ratio is 40%, 30%, 30%; the performance conditions are as follows: 2021-2023 revenue is not less than 2.93.887 million yuan, or the net profit is not less than 2.999 million yuan, with an annual growth rate of 30 percent from 2021 to 2023.
The company issued convertible bonds in the early stage, raising funds of 570 million yuan to expand production. The company intends to use all the funds raised for the "new automatic production project of precision parts of consumer electronics". The company's capacity utilization rate has exceeded 90% in 2019, and there has been a shortage of production capacity during the order-intensive period. The project will introduce advanced automated production and testing equipment to greatly improve the supply capacity of the company's MIM products. The project is expected to have a construction period of 3 years and full production in 5 years: the first year is mainly the site construction period, and the yield in the second to fifth years is 35%, 70%, 95%, 100%, respectively. The project plans to purchase 12 continuous furnaces in Germany to further consolidate the company's leading position in the industry. It is estimated that the production capacity of 627 million MIM pieces will be increased by 30% after reaching production capacity in 2019, with an annual net profit of 112 million yuan. The implementation of the project will effectively alleviate the bottleneck of the company's current lack of production capacity and meet the growing demand for orders for smartphones and wearables downstream. At present, convertible bonds have been issued and listed, and the funds raised have been put in place.
New demand is derived from technology iteration, and the prospect of the industry is good. With the continuous innovation of new technologies and the intergenerational replacement of consumer electronic terminals, there are many new demands for the upstream industry. On the one hand, new technologies such as 5G have spawned a wave of smartphone replacement this year, and with the rapid introduction of 5G mobile phones to the market, it is expected to lead to the overall recovery of the terminal market. On the other hand, the rise of new products and new technologies, such as folding screens, lifting cameras, TWS headphones, wearable devices and other products will be applied to the MIM process, we believe that the penetration of MIM products is expected to further improve, the industry will usher in explosive development.
Raise earnings forecasts and maintain buy ratings. The overall recovery of the consumer electronics industry this year, we expect the industry boom to continue next year, superimposed new capacity may be able to start production in the second half of next year, we raised 2020 and 2021 profit forecast to maintain the 2022 forecast, the 2020-2022 net profit is expected to be 165pm 237pm 321 million (the original forecast is 154pm 209100,321 million), corresponding to PE respectively is 33-23-17 times. As the leading company in the MIM industry, we continue to be optimistic about the future growth of the company and maintain its buy rating.