China United Network Communications Limited(600050) (600050)
The second phase of the equity incentive plan further improved the long-term incentive and strengthened the implementation of the strategy
The company disclosed the second restricted stock incentive plan (Draft), which plans to grant no more than 900 million restricted shares to about 8000 incentive objects (core management talents and professionals), accounting for about 2.9% of the current total share capital, with a price of RMB 2.48 per share, and the plan is valid for 60 months. Equity incentive will further improve the corporate governance structure, improve the medium and long-term incentive mechanism, effectively ensure the implementation of the new strategic plan, and fully mobilize the enthusiasm of employees.
Unlocking conditions focus on high-quality development and roe improvement percentage points, leading the industry
The unlocking conditions are oriented to the four indicators of main business income, total profit, return on net assets and economic value added (EVA). Among them, the growth rate of income and profit is required to be no lower than the industry average, the improvement percentage point of return on net assets is required to be industry-leading, and the system has high-quality development confidence and determination.
Requirements for the first / second / third unlocking period: 1) the main business income has improved year-on-year, and the growth rate of main business income in 2022 / 2023 / 2024 compared with 2020 shall not be less than 11.82% / 16.85% / 22.10%, and not lower than the industry average level; 2) The total profit has improved year-on-year. The growth rate of total profit in 2022 / 2023 / 2024 compared with 2020 is not less than 3.20% / 35.52% / 49.07%, and not lower than the industry average level; 3) The return on net assets in 2022 / 2023 / 2024 shall not be less than 4.10% / 4.25% / 4.40%, and the percentage point shall be improved compared with that in 2020, and shall not be less than two benchmarking enterprises in the same industry; 4) In 2022 / 2023 / 2024, the economic added value improved year-on-year.
The inflection point of the telecommunications industry is clear, and the company continues to develop steadily with high quality
Driven by 5g and innovative business, the inflection point of the telecommunications industry has been formed and continues to grow rapidly. The cumulative year-on-year growth rate of telecommunications business revenue has increased from 0.0% from January to September 2019 to 8.1% from January to November 2021. China United Network Communications Limited(600050) sustained high-quality and steady development. From January to September, the main business revenue increased by 7.3%, the total profit increased by 15.1%, the net profit attributable to the parent increased by 18.6% and the return on net assets increased by 3.77% and 0.54pct year-on-year. 5g user penetration and application development continue to drive, superimposed with the opportunity of digital transformation, the growth momentum of the company is expected to continue.
Profit forecast and valuation
Equity incentive strengthens the implementation of the strategy, reflects the confidence and determination of future development, and continues to be optimistic about the high-quality growth of the company’s performance. It is expected that the growth rate of net profit in 2021-23 will be 16.4% / 10.8% / 10.2%, maintaining the “buy” rating.
Risk warning: 5g application development is less than expected; The risk that the development of innovative business is less than expected.
