\u3000\u3000 Anhui Ronds Science & Technology Incorporated Company(688768) (688768)
Matters:
On February 19, 2022, the company issued the draft of restricted stock incentive plan for 2022, which plans to grant 1119500 shares of restricted stock (accounting for 2.04% of the total share capital of the company), and the grant price is 20.00 yuan / share (the closing price on February 18, 2022 is 77.47 yuan / share). The incentive objects granted for the first time in the incentive plan are no more than 444, accounting for 86.21% of the total 515 employees of the company at the end of 2021. The company level performance assessment target a (100% ownership ratio) is based on 2021. The revenue or net profit deducted from non parent company in 2022 / 2023 / 2024 increased by 40.00% / 82.00% / 136.60% respectively compared with 2021, corresponding to a year-on-year increase of 40% / 30% / 30% from 2022 to 2024 and cagr33.5% from 2021 to 2024 25%。 Among target B (80% of ownership ratio), 2022 / 2023 / 2024 increased by 32.00% / 65.60% / 109.28% respectively compared with 2021, corresponding to a year-on-year increase of 32.00% / 25.45% / 26.38% from 2022 to 2024 and cagr27.00% from 2021 to 2024 91%。
Guoxin machinery point of view: the company is the leader of intelligent operation and maintenance of industrial equipment in China. It is mainly engaged in condition monitoring and fault diagnosis system of industrial equipment. It provides 24-hour predictive diagnosis and care services for key equipment with high value, effectively improving equipment utilization and reducing maintenance cost. The company’s industrial equipment intelligent operation and maintenance industry is in the ascendant. As an industry leader, the company has a good position and strong competitiveness. It has occupied a leading position in the wind power industry. At present, it benefits from the development of the wind power industry and is accelerating its penetration into metallurgy, petrochemical, coal, cement and other industries, with great growth potential. The equity incentive plan covers a wide range and has high performance assessment objectives. It can fully motivate the majority of employees, help stabilize the core team, mobilize employees’ enthusiasm and highlight the company’s confidence in long-term development. We are optimistic about the long-term growth potential of the company, and with due consideration to the impact of share based payment fees, we slightly lowered the expected net profit attributable to the parent company from 2021 to 2023 to RMB 80 / 113 / 178 million (the previous value was RMB 84 / 1.25 / 195 million), corresponding to EPS of RMB 1.46/2.06/3.25, corresponding to pe53 / 38 / 24 times, maintaining the “buy” rating.
Comments:
Issue the restricted stock incentive plan for 2022 to further expand the scope of equity incentive
On February 19, 2022, the company issued the draft of restricted stock incentive plan for 2022, which plans to grant 1119500 restricted shares to incentive objects, accounting for 2.04% of the company’s total share capital (54.8655 million shares). Among them: 1) 1019500 shares were granted for the first time, accounting for 1.86% of the total share capital. The incentive objects granted for the first time shall not exceed 444, accounting for 86.21% of the total 515 employees of the company at the end of 2021, including the company’s core technicians and other personnel who need incentive. 2) 100000 shares are reserved for grant, accounting for 0.18% of the total share capital. The object of reserved grant is determined according to the subsequent actual development of the company. The initial grant price and reserved grant price are 20.00 yuan / share (the closing price of the company on February 18, 2022 is 77.47 yuan / share).
Before the IPO, the company implemented equity incentive in 2014 and set up an employee stock ownership platform Anhui Kerong. Anhui Kerong holds 6.3821 million shares of the company, accounting for 11.63% of the current total share capital of the company. This platform covers 27 people. In addition to 60.85% held by the chairman, many management and core technicians hold shares, and the core team is stable. The company issued the draft restricted stock incentive plan for 2022, which will further expand the incentive scope, fully mobilize the enthusiasm of employees and promote the long-term development of the company.
According to the announcement of the company, assuming the grant in mid March 2022, the first grant of the stock incentive plan is 1019500 shares, and the share payment fee to be amortized is 61.8378 million yuan. It is estimated that 2699.60/2191.35/1059.48/23334 million yuan will be amortized from 2022 to 2025.
Set up double performance appraisal at the company and individual levels, with high appraisal objectives, which fully demonstrates the company’s confidence in long-term development
This equity incentive plan sets double performance assessment objectives at the company and individual levels. 1) At the company level: the performance assessment target is the growth rate of revenue or deduction of non parent net profit from 2022 to 2024, which is divided into target a and target B, with the ownership proportion of 100% and 80% respectively. In target a, the income or net profit not attributable to the parent company is based on 2021, with an increase of 40.00% / 82.00% / 136.60% respectively in 2022 / 2023 / 2024 compared with 2021, corresponding to a year-on-year growth rate of 40% / 30% / 30% respectively in 2022-2024 and a CAGR of 33.25% in 2021-2024. In target B, the income or net profit not attributable to parent company is based on 2021, with an increase of 32.00% / 65.60% / 109.28% respectively in 2022 / 2023 / 2024 compared with 2021, corresponding to a year-on-year growth rate of 32.00% / 25.45% / 26.38% respectively in 2022-2024, corresponding to cagr27.00% in 2021-2024 91%。 2) Individual level: the company has set individual level performance appraisal requirements for incentive objects. According to the current performance appraisal system of the company, the performance appraisal of incentive objects is divided into three levels: good and above / qualified / unqualified, and the ownership proportion of individual level is 100% / 80% / 0% respectively. If the company level performance assessment meets the standard, the final number of shares to be owned shall be confirmed according to “planned ownership quantity * company level ownership proportion * individual level ownership proportion”. This time, the company has set a higher performance appraisal target. In the company level a target, the CAGR of income or deduction of non parent net profit from 2021 to 2024 is 33.25%, which is only slightly lower than the company’s income cagr37.5% from 2017 to 2020 97%, which further demonstrates the company’s confidence in long-term development.
The incentive plan covers 86.21% of the total number of employees of the company, with a wide range of incentives
The first grant of the stock incentive plan covers no more than 444 incentive objects, accounting for 86.21% of the company’s 515 employees at the end of 2021, mainly including core technicians and other employees. According to the company’s announcement, Fang Shikang served as the company’s chief software architect, and was awarded 25600 shares this time, accounting for 0.05% of the total share capital. Wang Xiangxiang served as the manager of the company’s intelligent algorithm department, and was awarded 15200 shares this time, accounting for 0.03% of the total share capital. Both of them are the company’s core technicians. In recent years, with the rapid development of the company’s business, the total number of employees of the company has increased rapidly. By the end of 2019 / 2020 / 2021, the total number of employees of the company has increased by 10.73% / 45.67% / 22.33% year-on-year, and the proportion of R & D personnel in the employee structure is relatively high. The equity incentive object covers 86.21% of the total number of employees, with a wide incentive range, which is conducive to stabilizing the team, attracting and retaining excellent talents, fully mobilizing the enthusiasm of employees and contributing to the long-term development of the company.
Looking forward to the future: the leader of intelligent operation and maintenance of industrial equipment has great long-term growth potential
The company is a specialized covid-19 military enterprise in Anhui Province, mainly engaged in the condition monitoring and fault diagnosis system of industrial equipment. It is one of the few intelligent operation and maintenance enterprises in China that have opened up all links of underlying hardware equipment, software, intelligent algorithm and diagnosis service. Its products collect, screen, transmit and analyze the physical parameters in the operation of key equipment with high value, Provide 24-hour and 24-hour predictive diagnosis and care services for equipment faults, reduce unplanned downtime, avoid potential safety hazards, improve the comprehensive utilization rate of equipment, and ensure the continuity, safety and reliability of production.
On the whole, the company’s products can help customers save 20% – 50% of planned maintenance time, 10% – 20% of equipment operation time and 5% – 10% of total equipment maintenance cost, creating considerable economic value for customers. At the industry level, the company has entered the supplier directory of the top ten enterprises in most industries of wind power, metallurgy and petrochemical. At present, the market share of the company’s wind power industry in 2017-2019 is 26.23% / 28.86% / 34.55%, which will continue to benefit from the development and increase of the market share of the wind power industry, and the business of metallurgy, petrochemical and other industries is expected to usher in great development, In particular, Baowu Zhiwei, a subsidiary of Baowu group in the metallurgical industry, has clearly put forward the goal of accessing millions of equipment to the intelligent operation and maintenance platform in three years. The penetration rate of intelligent operation and maintenance in the industry is low and the development demand is urgent. As the leader of intelligent operation and maintenance of industrial equipment, the company will fully benefit and have great long-term growth potential. The release of the draft equity incentive plan to expand the incentive scope and formulate higher performance assessment objectives will mobilize the enthusiasm of the majority of employees, promote the long-term development of the company and fully demonstrate the management’s confidence in the long-term development of the company.
Profit forecast and investment advice: maintain the “buy” rating
The company is the leader in the intelligent operation and maintenance of industrial equipment in China. It is mainly engaged in the condition monitoring and fault diagnosis system of industrial equipment. It provides 24-hour, all-weather predictive diagnosis and care services for key equipment with high value, effectively improving the utilization rate of equipment and reducing the maintenance cost. The company’s industrial equipment intelligent operation and maintenance industry is in the ascendant. As an industry leader, the company has a good position and strong competitiveness. It has occupied a leading position in the wind power industry. At present, it benefits from the development of the wind power industry and is accelerating its penetration into metallurgy, petrochemical, coal, cement and other industries, with great growth potential. The equity incentive plan covers a wide range and has high performance assessment objectives. It can fully motivate the majority of employees, help stabilize the core team, mobilize employees’ enthusiasm and highlight the company’s confidence in long-term development. We are optimistic about the long-term growth of the company and give due consideration to the impact of share based payment fees. We slightly reduce the expected net profit attributable to the parent company from 2021 to 2023 to 80 / 113 / 178 million yuan (the previous value was 84 / 125 / 195 million yuan), corresponding to EPS of 1.46/2.06/3.25 yuan, corresponding to pe53 / 38 / 24 times, and maintain the “buy in” rating.
Risk tip: the industry penetration is less than expected; The expansion of new fields is less than expected; Industry demand fell.
