\u3000\u3000 Qianhe Condiment And Food Co.Ltd(603027) (603027)
Event overview
The company issued a draft of restricted equity incentive, which plans to grant a total of 0.575% equity to the core employees, with the initial grant price of 9.79 yuan.
The company released the plan for non-public offering of A-Shares in 2022. The total amount of funds to be raised is 500-800 million yuan. After deducting the issuance expenses, all the funds raised will be used for the “intelligent manufacturing project of seasoning with an annual output of 600000 tons”, which is issued to the actual controller and Chairman Mr. Wu Chaoqun.
Analysis and judgment:
Equity incentives bind the core management and boost the internal enthusiasm
The company’s equity incentive performance assessment year is 22-24 years, and the unlocking target takes 21 years as the performance base, which is that the revenue growth rate in 22 years is not less than 18% or the net profit growth rate is not less than 50%; The revenue growth rate in 23 years shall not be less than 38% or the net profit growth rate shall not be less than 90%; The 24-year revenue growth rate shall not be less than 60% or the net profit growth rate shall not be less than 130%. After simple accounting, the corresponding revenue growth rate of the company in 22-24 years is not less than 18% / 17% / 16% respectively, and the net profit growth rate is not less than 50% / 27% / 21% respectively. Based on the equity incentive target, the revenue scale of the company is expected to exceed 3 billion yuan and the net profit scale is expected to exceed 460 million yuan in 2024, so as to further strengthen the competitiveness and scale advantage of Qianhe in the condiment industry. The company is expected to continue to explore the opportunity of zero addition track through differentiated layout in condiment track, take soy sauce as the core, increase the business of vinegar and cooking wine, promote diversified layout, and make multiple efforts in channel end retail, catering and e-commerce to improve market coverage and ensure the smooth completion of equity incentive objectives.
The first grant price of the company’s restricted equity incentive is 9.79 yuan, which is 50% lower than the latest closing price of 19.66 yuan. The price is attractive. The superimposed performance unlocking goal is relatively reasonable. It is expected that the management and core employees will have a high enthusiasm for participation. From the perspective of coverage, the equity incentive is granted to 73 employees in total, covering the company’s directors, senior managers, middle managers and core backbone, which is expected to further improve the subjective initiative of core employees.
The chairman fully participated in the fixed growth to demonstrate his confidence in long-term development
The issuance target of the company is Mr. Wu Chaoqun, the chairman of the board of directors. The issuance amount is between 500-800 million yuan, which will be fully subscribed by the chairman of the board of directors. After deducting the issuance expenses, all the fixed and increased expenses will be used for the “intelligent manufacturing project of seasoning with an annual output of 600000 tons”. The full subscription of the chairman will further increase the shareholding ratio of the chairman, strengthen his control over the company, and highlight the chairman’s confidence in the long-term development of the company.
After the completion of the fixed increase project, the company will increase the annual production capacity of 500000 tons of brewing soy sauce and 100000 tons of cooking wine. The fixed increase fund-raising will enhance the company’s capital reserve. With the help of the company’s rich project construction experience, it is expected to accelerate the smooth construction of production capacity. After the completion of the company’s new production capacity, the production capacity of soy sauce and cooking wine will double, which will effectively ensure the company’s scale expansion and escort the company’s sustainable expansion and development in the industry.
The industry continues to improve, waiting for Qianhe’s competitive advantage to be realized
With the continuous improvement of the population and price increase of the whole seasoning industry, we are still optimistic about the continuous improvement of the overall operation level of the seasoning industry. Although the overall operation level of the whole seasoning industry is expected to recover due to the continuous improvement of the epidemic situation, the overall operation level of the seasoning industry is expected to continue to improve. Qianhe has differentiation advantages in the industry. This equity incentive and fixed increase have a more direct effect on boosting internal and external confidence and overweight capacity layout. We are optimistic that Qianhe’s differentiation advantages will continue to be realized with the recovery of the industry.
Investment advice
Referring to the equity incentive target, we lowered the forecast of the company’s revenue of RMB 1.964/2.460/3.054 billion in 21-23 years to RMB 1.964/2.764 billion, and adjusted the eps0.00 in 21-23 years The forecast of 26 / 0.38/0.51 yuan is 0.26/0.39/0.50 yuan, corresponding to the closing price of 19.66 yuan / share on February 23, 2022, and PE is 76 / 50 / 39 times respectively. As the company’s equity incentive boosted confidence, we judged that the company’s performance would improve steadily and maintain the company’s “overweight” rating.
Risk tips
Rising raw material costs, food safety and intensified industry competition
