Zhejiang Supcon Technology Co.Ltd(688777) (688777)
Event: on January and February 15, 2021, the company issued the equity incentive plan, and the number of restricted shares to be granted to the incentive object was 2993500 shares, accounting for about 0.61% of the company’s total share capital of 494084000 shares on the announcement date of the draft equity incentive plan
comment:
The equity incentive plan shows the confidence of the management and helps to stimulate the vitality of employees
According to the company’s announcement, the number of restricted shares to be granted to incentive objects by the company is 2993500 shares, and the grant price is 39.50 yuan per share. The company’s equity incentive plan covers a wide range of personnel and is specifically divided into five attribution periods, which shows the management’s confidence in the development of the company, helps to further improve the enthusiasm of the management and other employees, fully stimulate the vitality of the company and lay a good foundation for the long-term development of the company.
Equity incentive covers a wide range of personnel, which helps to strengthen the deep binding between the core backbone and the company
A total of 1003 people are involved in this plan, Accounting for 20.55% of the total number of 4880 employees (as of November 30, 2021), in addition to the company’s senior executives / key employees, it also widely covers other outstanding talents of the company. We believe that this equity incentive will help to deeply bind the company’s core backbone on the one hand, and enhance the company’s employees’ sense of belonging and improve the company’s overall vitality on the other hand.
The assessment standard is clear, which further improves the certainty of the company’s future performance
The assessment year of the company’s incentive plan is five fiscal years from 2022 to 2026. The assessment is conducted once every fiscal year. On the basis of deducting the net profit attributable to the parent company affected by share based payment, it is proposed that the growth rate of operating revenue and net profit in 2026 shall not be less than 100% compared with the performance in 2021. On this basis, the company’s performance appraisal results for incentive objects are divided into five grades: A, a -, B, C and D. they can be attributed only if the achievement rate of the company’s performance objectives and personal strategic objectives in the previous year is 100% or more and the performance appraisal grade is a, a – or B.
Based on our prediction of the company’s annual operating revenue of 4.11 billion yuan and net profit of 560 million yuan in 2021, if the company successfully reaches the assessment target in 2026, the company’s operating revenue and net profit will not be less than 8.22 billion yuan / 1.13 billion yuan respectively. The company has a large room for future performance growth. As a leading enterprise of process intelligent manufacturing, It is expected to fully enjoy the development trend of Intelligent Manufacturing in China’s industry
Under the background of “double carbon”, the market prospect of process industrial control is broad
In the long run, China’s process industry has a large market space brought by the upgrading of industrial control products under the goal of “double carbon”. China’s process industry has two characteristics in terms of carbon emission: first, the average process level and equipment of China’s process industry are backward, the degree of automation is low, and the energy consumption is still in the stage of extensive management. It is difficult to significantly control the energy consumption only by means of process optimization and energy-saving technology. It is necessary to update the automation equipment and upgrade the basic automation; Second, at present, the total energy consumption of China’s process industry is considerable, and there is huge room for improvement. The national carbon emissions can be significantly reduced by reducing the energy consumption of the process industry. Under the long-term goal of “double carbon”, the further improvement of the automation level of China’s process industry is an inevitable trend, and there is a large market space for the renewal of industrial control products.
Domestic substitution logic of high-end industrial control products to create a new growth curve of the company
At present, the localization rate of China’s high-end industrial control / industrial software products is still low, and there is much room for domestic substitution. The company insists on investing in R & D and constantly breaks through high-end industrial control products. At present, it has ranked first-class in the world. In the first half of 2021, the company joined forces with a number of major customers to create a number of benchmark projects. DCS products successfully broke through the production units of BASF, a global chemical giant, and made great progress in high-end industrial control products. In addition, the company’s strength in industrial software is also increasing. At present, the company has many advanced industrial software such as MES / APC, and actively layout basic software products such as database. In the future, industrial software is expected to become a new growth point of the company, and high-end industrial control / Industrial software products open a new growth curve for the company.
Deepen the layout of the whole industrial chain and boost the company’s performance with multiple products
Zhejiang Supcon Technology Co.Ltd(688777) taking the control system (DCS + SIS + PLC) as the cornerstone, the company will create an “industrial tentacle” downward, layout instrument related products, create an “industrial smart brain” upward, and layout a variety of industrial software. There are obvious synergistic effects among various businesses to enhance the overall competitive advantage of the company. At the same time, the company will “Online + offline” With concerted efforts, 5S automatic housekeeper and S2B platform jointly build a perfect marketing network and service system. In the context of intelligent manufacturing, the prosperity of the industrial control industry driven by national policies and markets has improved. As a Chinese industrial control leader with core competitive advantages, the company has actively deepened the layout of the whole industrial chain and coordinated development of multiple products, with broad development prospects in the future.
Profit forecast and investment rating
In the era of industry 4.0, the intelligent manufacturing industry is expected to accelerate its development. Zhejiang Supcon Technology Co.Ltd(688777) as a leading enterprise in China’s industrial control & intelligent manufacturing, it will actively promote the layout of “one body and two wings”, and there will be a large development space of “one vertical and one horizontal” in the future. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 555 million yuan, 696 million yuan and 872 million yuan respectively, corresponding to 69.29 times, 55.29 times and 44.10 times of PE, maintaining the “buy” rating.
risk factor
Downstream industry fluctuation risk, company development is less than expected, covid-19 epidemic spread
