Zhejiang Supcon Technology Co.Ltd(688777) (688777)
Event: on the evening of December 15, 2021, the company issued the 2021 restricted stock incentive plan, which planned to grant 2993500 restricted shares (0.61% of the total share capital) to 1003 employees (accounting for 20.55% of the total number of the company on December 30, 2021), and the grant price was 39.5 yuan / share, about 50.7% of the latest closing price.
Make progress while maintaining stability in the next five years. The incentive plan assesses the income and net profit attributable to the parent company from 2022 to 2026 (excluding the impact of share based payment, the same below), the growth rate of revenue and net profit attributable to parent company in 2021 is not less than 20% / 40% / 60% / 80% / 100%, corresponding to the year-on-year growth rate of revenue and net profit attributable to parent company in 2022-2026 is not less than 20% / 16.7% / 14.3% / 12.5% / 11.1% respectively, and the corresponding amortization amount is expected to be RMB 5509 / 3173 / 1980 / 1156 / 524 million respectively (measured by the latest closing price), generally speaking, we will make steady progress in the next five years.
There are plenty of orders in hand and the industrial prosperity is high. As we reasoned in the previous report Zhejiang Supcon Technology Co.Ltd(688777) : annual report meets expectations and comprehensive transformation speeds up, “the newly signed contracts in 2020 are expected to exceed 4.7 billion yuan, and the probability of orders on hand at the end of 2020 is no less than 4.9 billion yuan”. The company has sufficient orders on hand throughout the year. The company’s Q3 revenue in 2021 increased by 27.10% year-on-year, Although the month on month growth rate is higher than the year-on-year growth rate of 20.54% of single Q2 (but the income base formed by the delay of 2020q1 orders caused by the epidemic in 2020q2 is relatively high), we expect that the company is affected by macro disturbance factors such as power restriction in the third quarter to a certain extent (the company’s inventory continues to increase by 430 million yuan month on month, and the interim report data shows that about 3 / 4 of which is the income to be recognized) “Issued goods” account). Referring to the company’s revenue in the first three quarters of 2017-2020, which accounted for 65.2%, 63.0%, 66.5% and 65.5% respectively, we assume that the revenue in the first three quarters of this year accounted for about 2 / 3, so the simple estimation of the annual revenue this year corresponds to 4.38 billion yuan, and the annual revenue can still maintain high growth. The gross profit margin of Q3 in 2021 was about 39.20%, down about 5 pct year-on-year, We believe that the main reason is the change of income structure (WeChat’s official account of the WeChat public company disclosed in October 19, 2021 that the DCS system of the company broke through the global chemical giant BASF production device, and verified the hard core strength of the company’s products. With the landing of such projects and the high degree of prosperity of the industry, we expect that the comprehensive gross profit margin of S2B will gradually increase. At the end of the period, the contract liabilities reached a record 2.356 billion yuan, with a continuous increase of 223 million yuan month on month. Considering the company’s collection mode (the company’s prospectus disclosed about 60% of the collection before the project is put into operation), we believe that the new orders signed by the company in the same period also reflect the high prospect of the industry.
Maintain the “buy” rating. We predict that the company’s revenue from 2021 to 2023 will be about 4.53 billion yuan, 6.071 billion yuan and 8.035 billion yuan, and the net profit attributable to the parent company will be about 571 million yuan, 730 million yuan and 1.059 billion yuan, maintaining the “buy” rating.
Risk warning: fluctuation risk of downstream industry; Risk that R & D investment is less than expected; Import risks of some important raw materials; Risk of continuous fermentation of covid-19 epidemic
