\u3000\u3 China Vanke Co.Ltd(000002) 126 Zhejiang Yinlun Machinery Co.Ltd(002126) )
Event: the company announced the latest equity incentive plan, which plans to issue 51.3 million options, accounting for 6.5% of the total share capital, with an exercise price of 10.14 yuan, covering 388 core middle and senior backbone employees (see the announcement for the detailed plan).
1. Strong equity incentive and wide coverage. The equity incentive plan accounts for 6.5% of the total shares, and the absolute scale is already large. At the same time, considering the proportion of major shareholders, the relative scale of equity incentive is larger, which reflects the determination of major shareholders and management to motivate core employees. The incentive covers 388 employees, accounting for 15% of the number of employees except the front-line production personnel. It basically achieves the full coverage of the middle and senior levels, reflecting the determination of the core backbone to make a concerted sprint.
2. The exercise price is higher than the current stock price, so as to truly achieve incentive rather than reward. This equity incentive adopts the option rather than the usual restricted stock, and the exercise price is higher than the current stock price. It really closely links the interests of core employees with the market value of the company, and also binds the interests of core employees with shareholders, so as to truly achieve incentive rather than reward.
3. If the unlocking period is reasonable and the performance goal is achieved, the company will point to the leading enterprise in the first echelon of global thermal management. The intense equity unlocking period is divided into four years (20232026). After the achievement of the last performance target, the company’s revenue will reach 15 billion yuan and its net profit will reach 1.05 billion yuan. In terms of scale, it will become a world leading thermal management enterprise.
4. The long slope and thick snow in the thermal management industry has laid a good foundation for yinlun to achieve its performance objectives. In several in-depth reports on new energy thermal management, we pointed out that new energy vehicles have brought new increment to the traditional thermal management industry, and the added value of single vehicle thermal management has been increasing. The leading advantage of China Shanxi Guoxin Energy Corporation Limited(600617) automobile makes Chinese thermal management enterprises ahead of their former competitors in the introduction of new products and technologies. At the same time, China’s low-cost and leading technology capabilities also make the traditional automobile thermal management continue to transfer to Chinese enterprises. This subdivided industry will produce many international enterprises in China in the future. Yinlun has become the prototype of a world-class enterprise at present.
Investment strategy: we expect the company’s net profit attributable to the parent company to be 320 / 420 million in 21 / 22. At present, the stock price corresponds to 17 times of the company’s dynamic PE in 2022, maintaining the company’s “buy” rating.
Risk tip: the sales volume of customers is less than expected, and the popularization of new energy is less than expected.
