Jingjin equipment ( Jingjin Environmental Protection Co.Ltd(603279) )
Event:
On March 28, 2022, Jingjin equipment released the 2022 restricted equity incentive plan (Draft).
Key investment points:
Then issue the equity incentive plan to demonstrate the company’s confidence in long-term development. In this incentive plan, the company plans to grant 8059300 restricted shares to the incentive object at the price of 20.24 yuan / share, accounting for 1.96% of the total share capital. The incentive objects include director Yang Mingjie, deputy general manager Lu Yi, and 292 core technical / business personnel. The company’s equity incentive plan is another employee incentive after the equity incentive launched in 2020, demonstrating the management’s confidence in the company’s long-term development.
Steady performance appraisal objectives are conducive to binding the interests of core employees and ensuring the long-term development of the company. The performance assessment objectives of the company’s equity incentive are: the income from 2022 to 2024 shall not be less than RMB 5.06/54.9/5.99 billion (the year-on-year growth rate from 2023 to 2024 shall not be less than 8.6% / 9.1%), or the net profit attributable to the parent company from 2022 to 2024 shall not be less than RMB 740 / 8.0/850 million (the year-on-year growth rate from 2023 to 2024 shall not be less than 8.4% / 7.1%). Compared with the previous performance, the performance assessment objectives of equity incentive of the company are not high. We believe that the above performance assessment objectives can not fully represent the prediction of the company’s future performance. Review the performance assessment objectives of the company’s 2020 equity incentive plan: from 2020 to 2021, the year-on-year growth rate of revenue shall not be less than 0.3% / 5.9%, or the year-on-year growth rate of net profit attributable to the parent company shall not be less than 4.5% / 6.7%. From the actual completion situation, in 2020 and the first three quarters of 2021, the year-on-year growth rate of the company’s revenue was 0.6% / 45.6% and the year-on-year growth rate of net profit attributable to the parent was 24.6% / 44.1% respectively. The growth rate of net profit attributable to the parent was much higher than the performance assessment target. We believe that the company’s stable performance appraisal goal of equity incentive just shows the company’s positive attitude towards employee incentive, which is conducive to binding the interests of core employees and ensuring the long-term development of the company.
The demand of downstream industries is growing rapidly, and the company actively seizes the opportunity to expand its application. Jingjin equipment is a leading company in the filter press industry. All kinds of filtration and separation equipment are widely used in environmental protection, minerals and processing, chemical industry, gravel aggregate, new energy, new materials, food, medicine and other fields. Downstream application countries pay more attention to environmental protection and gravel aggregate, the new energy industry continues to be high-profile, and the application scope of filter press in the new material industry continues to expand, which is expected to continue to drive the company to achieve rapid growth.
Profit forecast and investment rating: considering that the company expects the amortization cost of the equity incentive from 2022 to 2023 to be 62.46/61.57 million yuan respectively, we expect the net profit attributable to the parent company from 2021 to 2023 to be 6.53/8.48/1.061 billion yuan respectively, with growth rates of 27% / 30% / 25% and corresponding PE of 25X / 20x / 16x respectively. We are optimistic about the leading position of the company in the filter press industry. With the continuous growth of downstream application demand, the company is expected to continue to benefit as a leader and maintain the “buy” rating.
Risk warning: the development of the industry is lower than expected; Industry competition intensifies; Technology substitution in the industry; The market share of the company decreased; Substantial increase in the price of raw materials, etc.
