Shenzhen Senior Technology Material Co.Ltd(300568) product and customer structure optimization + process progress, and the single average profit continued to improve

\u3000\u3000 Shenzhen Senior Technology Material Co.Ltd(300568) (300568)

Events

Recently Shenzhen Senior Technology Material Co.Ltd(300568) announced the performance forecast and equity incentive plan for 2021: the company expects to deduct 290-300 million yuan of non parent net profit in 2021, a year-on-year increase of + 131-139%. The company announces stock options and restricted stock incentive plans.

Brief comment

Product structure optimization + process improvement and cost reduction to promote the continuous improvement of single average profit.

The sharp decline in the price of China’s diaphragm and the exploratory stage of Xingyuan wet diaphragm are the main reasons for the continuous decline of Xingyuan’s single average net profit in the past. Since 2021, the company’s product structure has been significantly optimized, and the shipment of wet diaphragm to LG and other overseas customers has increased significantly, with a gain of LG4 The total amount of wet coating within 5 years is about 4.311 billion yuan; At the same time, process improvement promotes cost reduction. It is expected that the fourth generation production line will be applied in Nantong base, with a width of 6.2m and a significant increase in production line efficiency. We expect that the operating net profit of single level in 2021q4 (excluding bonus and other expenses) has increased to 0.37 yuan / m2. Considering that the proportion of overseas / coated film shipments has further increased since 2022 and the continuous spread of diaphragm price rise in China, the company’s single level net profit is expected to increase to 0.42 yuan / 0.48 yuan / m2 from 2022 to 2023.

Accelerate production expansion and actively prepare for the golden age of new energy.

With the gradual production of European factories and Nantong factories, Xingyuan diaphragm business will enter a period of substantial expansion. We expect that by the end of 2022 / 2023, the company’s production capacity will reach 3 billion square meters (dry process 1 billion square meters + wet process 2 billion square meters) / 4.5 billion square meters (dry process 1.5 billion square meters + wet process 3 billion square meters).

Launch equity incentive plan to boost long-term growth.

On January 26, the company announced the stock option and restricted stock incentive plan. The number of restricted shares to be granted was 3.26 million, accounting for 0.42% of the total share capital; The authorized price is 18.25 yuan (the closing price of 1 / 26 is 36.32 yuan). The exercise conditions include the requirements for profitability in the next three years: the growth rate of non net profit deducted in 22-24 years is not less than 105% / 175% / 340% compared with that in 2021. If the non net profit deducted in 21 years is 300 million, the corresponding non net profit deducted in 22-24 years is not less than 620 / 8.3 / 1.32 billion yuan.

The incentive plan has set high targets for performance in the next three years, with wide coverage and strong incentive (the exercise price is about half of the current price). In the period of labor shortage in the industry, it can fully stimulate the enthusiasm of employees and improve the retention rate of employees, and help the long-term growth of the company.

Profit forecast

It is estimated that from 2022 to 2023, the net profit attributable to the parent company will be 700 million and 1.27 billion, corresponding to 36 and 20 times of the P / E of the share price on February 18.

Risk tips

The production expansion progress is less than expected; The price rise was less than expected.

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