Shanghai Milkground Food Tech Co.Ltd(600882) (600882)
Event overview
The company announced the stock repurchase plan. It plans to repurchase 5-10 million shares for the implementation of the employee incentive plan, accounting for 0.97% – 1.94% of the company’s total share capital. The repurchase price shall not exceed 79.39 yuan / share (150% of the average price in the previous 30 trading days). The total repurchase capital is expected to not exceed 793.9 million yuan. The source of capital is self owned or self raised funds.
Analysis and judgment:
1. At the beginning of 2021, the company implemented phase I equity incentive, and the number of stock options and restricted shares granted was 12 million, accounting for 2.94% of the total share capital of the company, The incentive objects include 4 senior executives and 206 core technical (business) personnel, accounting for 12.4% of the number of employees in the company in 2020. The performance assessment target of operating revenue reaching RMB 4 / 6 / 8 billion respectively from 2021 to 23 is set. The number of shares to be repurchased in this announcement is 5-10 million. Considering the incentive at the beginning of the year, the proposed incentive is relatively strong.
2. Compared with the beginning of the year, an important change in the company’s business level is the establishment of the normal temperature business department, and the normal temperature cheese stick was listed at the end of September. The proposed equity incentive plan needs to be announced. We judge that the proposed new employee incentive plan will focus more on promoting the accelerated development of new business, showing the company’s emphasis on new business and firm confidence in development. We look forward to further clarifying the development objectives of new business after the announcement of the incentive plan. We believe that the distribution outlets of normal temperature cheese sticks are several times higher than those at low temperature, and the costs of refrigeration and cold chain transportation are saved. The future development space and rapid growth of normal temperature cheese business can be expected.
Investment advice
The company announced that the stock repurchase plan is intended to be used for employee incentive. We judge that the incentive plan to be launched will focus more on promoting the accelerated development of normal temperature cheese business and leading the company into a new growth curve. As the new performance target has yet to be defined, we maintain the previous profit forecast. It is expected that the revenue in 2021-23 will be 4.64/72.3/9.58 billion yuan, the net profit attributable to the parent company will be 3 / 7.1/1.14 billion yuan, and eps0.5 billion yuan 58 / 1.38/2.21 yuan. The closing price on November 30, 2021 is 58.5 yuan, corresponding to 42 times of P / E in 2022. The buy rating is reiterated.
Risk statement
① The sales of new products at room temperature is less than expected; ② Risk of intensified market competition; ③ Food safety issues
