Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (600426)
Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) announced the restricted stock incentive plan for 2021 on December 24, 2021. It is planned to grant 13.2 million restricted shares to 190 directors, senior executives, backbone of core technology, operation and management skills, with the grant price of 17.93 yuan / share, accounting for 0.625% of the total share capital of the company at the time of announcement of the draft plan, and take the income growth rate and dividend per share from 2022 to 2024 as the assessment index.
Among the granted objects, 11 persons, including directors and senior executives, accounted for 19.6%, and the remaining 179 backbone of core technology, operation, management and skills accounted for 60.7%. The scope of personnel has been expanded compared with the previous stock incentive plan, with a high degree of personnel overlap, which is the third stock incentive since 2015.
The restrictions on the sale of shares are lifted in three phases according to the income growth rate and dividend per share from 2022 to 2024. According to our calculation, it is easier to achieve the goal.
The assessment income target takes the income in 2020 as the base to assess the income growth rate and pre tax dividend per share in 2022-2024. It is required that the total income in 2022 / 2023 / 2024 will increase by 80% / 85% / 160% respectively compared with RMB 13.11 billion in 2020, and shall not be lower than the industry average growth rate of that year and the current quantile based on the growth rate in 2020. According to our calculation, the target value of revenue in 2022-2024 is RMB 236.1/242.6/34.1 billion respectively, corresponding to the year-on-year growth rate of revenue in 2023-2024 of 2.8% / 40.5%.
According to our calculation, it is less difficult to achieve the revenue target in 2022 / 2023. Based on the existing capacity, the target can be achieved according to the operating rate of 90% and the quantile value of 45% of the product price in five years. The 160% growth target in 2024 implicitly includes the revenue contribution target of Jingzhou project phase I, nylon new materials and other projects, which is also in line with the 2-3-year construction cycle of new projects. We estimate that the announced new projects can reach the target according to the level of 60% operating rate and 45% price quantile.
The dividend target per share from 2022 to 2024 is no less than RMB 0.4/0.45/0.5 per share, which is higher than the average dividend per share from 2015 to 2020 of RMB 0.35. The net interest rate of the company in the past five years has been higher than 10%. According to the stock incentive income target and the minimum net interest rate of 10%, it is easier to complete the dividend target.
The stock incentive goal is clear and has strong guidance for long-term growth, which shows the company’s confidence in long-term development. We once again emphasize that as the leader of China’s coal chemical enterprises, the future growth attribute of the company deserves more attention.
According to our calculation, it is easy to achieve the stock incentive target, but the annual revenue growth target of more than 40% year-on-year in 2024 under the assessment mechanism shows the company’s confidence in long-term growth. In our in-depth report and each comment report, we have repeatedly stressed that Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) as a leading coal chemical enterprise, expand fine products downstream, build Jingzhou base horizontally, and create a second development platform. Its growth attribute is the core covered under the periodic attribute, which deserves high attention.
Profit forecast: due to changes in product prices, we adjusted the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be RMB 7.039/6.054/6.491 billion (the previous value is RMB 6.290/68.49/7.115 billion), corresponding to EPS of RMB 3.33/2.87/3.07/share from 2021 to 2023. We will continue to give 18 times valuation in 2021, raise the target price to RMB 59.99 (the previous value is RMB 53.51), and maintain the “buy” rating.
Risk warning: the construction progress of the project is less than expected; The company’s revenue growth rate is lower than the industry average;
