\u3000\u3 Guocheng Mining Co.Ltd(000688) 698 Suzhou Veichi Electric Co.Ltd(688698) )
Event overview: on April 8, 2022, the company issued the 2022 restricted stock incentive plan (Draft). The plan plans to grant 3.6 million restricted shares to 180 technical and business backbones, accounting for 2% of the total share capital of the company. Among them, 3085000 restricted shares are granted for the first time, 515000 shares are reserved for grant, and the grant price is 13.98 yuan per share.
The incentive plan is bound to the core backbone, and the high growth target shows the development confidence of the company. 1) The equity incentive plan fully binds the core technology and business backbone of the company. This equity incentive plan plans to motivate 180 employees, including the technical backbone and business backbone of the company, accounting for 18.5% of the total number of employees, covering a wide range. It is expected to mobilize the enthusiasm of employees and fully bind the interests of core employees with the development of the company. 2) The goal of this equity incentive plan is high. The exercise condition of Grade A at the company level of this equity incentive plan is that based on the revenue in 2021, the revenue growth rate in 2022 / 2023 / 2024 shall not be less than 30% / 60% / 100% respectively, or based on the net profit in 2021, the net profit growth rate in 2022 / 2023 / 2024 shall not be less than 25% / 55% / 95% respectively. The company’s exercise goal is high, which shows that the company has sufficient confidence in operation and development, high medium and long-term performance and strong growth certainty.
The industrial automation industry has a broad space, and domestic substitution is accelerating. With the gradual transformation of China’s demographic dividend into engineer dividend and the improvement of product production accuracy, China’s industrial automation has broad growth space. In 2020, the market scale of China’s industrial automation products + services will reach 205.7 billion yuan, and it is expected that the market scale will reach 253.2 billion yuan in 2023. In terms of market structure, high-quality domestic manufacturers, with their localization advantages such as rapid response, low cost and customized services, continue to narrow the gap with traditional foreign manufacturers in product performance and technical level, improve brand influence and market share, and are accelerating the penetration from medium and low-end market to medium and high-end market. The localization rate of industrial automation industry has gradually increased from 24.8% in 2009 to 40.8% in 2020 The performance growth rate far exceeds that of the industry, which is in the acceleration period of domestic substitution.
The company’s special plane strategy has been steadily promoted, and the development of the industry has been fruitful. 1) The company has a relatively complete product line. The company has the supply capacity of industrial control core products such as frequency converter, servo system and control system, and can provide customized and integrated solutions with high added value for downstream customers. The comprehensive gross profit margin has always been maintained at a high level of about 40%. 2) The company’s special aircraft products have achieved breakthroughs in many industries. Relying on the marketing system of “region + industry”, the company has deeply cultivated the subdivided industries such as hoisting, mining machinery, electro-hydraulic servo, compressor, machine tool, photovoltaic water lifting and textile machinery, launched a variety of industry system solutions, and accelerated the expansion of emerging industries such as lithium battery and energy storage. The performance of key industries of 21h1 company has reached 61.65%, and the industry performance has increased significantly.
Investment suggestion: the company’s revenue and net profit attributable to the parent company have achieved high growth in 2021, and is expected to maintain a high growth rate from 2022 to 2023. We expect the company’s revenue from 2021 to 2023 to be 819 million yuan, 1080 million yuan and 1475 million yuan respectively, with corresponding growth rates of 43.1%, 31.9% and 36.5% respectively; The net profit attributable to the parent company was RMB 127 million, RMB 169 million and RMB 249 million respectively, with the corresponding growth rates of 44.7%, 33.2% and 47.4% respectively. Based on the closing price on April 8, the corresponding 21e-23e PE was 25X, 19x and 13X. Maintain a “recommended” rating.
Risk warning: the risk that the downstream demand is less than expected; The risk that the market development is less than expected.
