A brief comment on the event
On May 27th, the company issued the 2021 stock option incentive plan, which intends to grant 1900 stock options to 249 subjects with an exercise price of 12.05 yuan per share.
Business analysis
The incentive plan guides a compound growth of 47% over the next three years, and the exercise price is higher than the current price to show confidence. According to the draft incentive plan, the performance evaluation of stock option exercise requires that the net return profit of stock option exercise should not be less than 2.2\ 3.8\ 520 million yuan (corresponding to PE is only 27X\ 16X\ 11x). It is expected that the compound growth rate in the next three years will reach 47%, and only when the annual performance reaches at least 90% or more, the company will be qualified to exercise power, which shows that the company has a good grasp of future performance. In addition, the exercise price determined by the company is higher than the current price, which fully demonstrates the business confidence of the company. We believe that the company will guide future high performance growth, mainly considering that in the short and medium term, products including mobile phone HDI from mainstream ODM manufacturers, advantage products MiniLED HDI, e-cigarette Rmurf PCB, new energy vehicle PCB and FPC, Switch game console FPC, etc., while the company's future in the HLC, HDI, packaging substrate and other high-end product layout will open space, it can be seen that the company's short-and long-term performance growth certainty can be expected.
The technical transformation of the old factory plus the launch of the new plant in Zhuhai, the new production capacity brings growth momentum. With the rapid growth of downstream demand, the company will also open new production capacity this year: 1) Zhuhai Fushan multilayer board & HDI, has been trial-produced and is expected to be put into full production in June. After the production capacity is fully put into production, the company's perennial capacity bottleneck can be alleviated. The planned output value of the whole plant is 203.5 billion yuan, which is expected to be completely released within two years from this year. 2) Zhuhai Fushan FPC and FPCA, are mainly equipped with soft boards for mobile phones and other smart terminals, which are expected to be put into production in May this year, and the planned output value can reach 200,300 million yuan after full production, which is expected to be fully released within this year. 3) Chengdu base FPCA, has been put into production in January 2021 and will gradually reach production in the future. In the future, the company will also open FPC and IC board production capacity in Gaolan Port, Zhuhai, and multi-level production capacity will bring growth impetus for the company's growth.
Investment suggestion
Considering that the company's business is on the right track and its production capacity is about to be released, we expect the company to achieve a net profit of 238 million yuan, 390 million yuan and 536 million yuan in 2021 and 2023, corresponding to a PE of 25X\ 15X\ 11X, with a "buy" rating.
Risk hint
Industry expansion leads to lower prices; increased competition leads to lower-than-expected orders; the progress of production expansion is not as expected; the pledge rate of the first three major shareholders is higher; the risk of lifting the ban on restricted shares.