\u3000\u3000 Digital China Group Co.Ltd(000034) Digital China Group Co.Ltd(000034) )
Event: on April 11, 2022, Digital China Group Co.Ltd(000034) announced the employee stock ownership plan for 2022. The participants of this employee stock ownership plan are no more than 400 (including 15 core executives), and the total capital scale is no more than 270 million yuan (including financing).
The capital scale does not exceed 270 million yuan, of which 180 million yuan is planned to be purchased through the secondary market. The total capital scale of the employee stock ownership plan is no more than 270 million yuan (including the financing part, and the ratio of the financing amount to the self raised amount is no more than 1:2), of which 90 million yuan is intended to be used for the acquisition of shares repurchased by the company, and it is estimated that about 8.2872 million shares; 180 million yuan is intended to be purchased through the secondary market (including but not limited to bidding transactions and block transactions), and about 118499 million shares are expected. Taken together, it is estimated that the number of shares involved in this ESOP is about 201371 million, accounting for 3.05% of the company’s current total share capital.
High performance unlocking requirements highlight the company’s performance confidence. The employee stock ownership plan will set the following assessment indicators for the repurchased shares of the transferee company: the net profit attributable to the parent company in 2022 will not be less than 1 billion yuan (unlock 50%), and the net profit attributable to the parent company in 2023 will not be less than 1.2 billion yuan (unlock 50%). Previously, the net profit attributable to the parent company in 2021 was 238 million yuan (the non recurring loss caused by the sale of DiXinTong was 477 million yuan and the deduction of non net profit was 672 million yuan). The performance evaluation index of the employee stock ownership plan is high, which shows the company’s confidence in future performance.
Executives participate more, lock-in period is long, and continue to consolidate performance confidence. The incentive objects of this ESOP are the company’s employees, a total of no more than 400, including 15 directors, supervisors and senior managers, accounting for 23.94% of the total share of the ESOP. Based on the objectives of long-term incentive and long-term restraint, the first sale period of the employee stock ownership plan is 36 months to 48 months from the date of adoption of the general meeting of the company (the proposed withdrawal proportion is 50%), and the second sale period is 48 months to 60 months from the date of adoption of the general meeting of the company (the proposed withdrawal proportion is 50%). Core executives have a large number of participants and a long lock-in period, forming an effective and sustainable employee incentive.
Investment suggestion: the company is the leader of it distribution in China, with rapid growth of cloud business and Xinchuang business, and is expected to continue to benefit from the trend of large-scale Xinchuang. This employee stock ownership plan highlights the company’s performance confidence and forms an effective and sustainable employee incentive. We estimate that the operating revenue of the company from 2022 to 2024 will be 132475 billion yuan, 140799 billion yuan and 146808 billion yuan respectively, the net profit attributable to the parent company will be 1.005 billion yuan, 1.213 billion yuan and 1.315 billion yuan respectively (the performance will be increased by 5.79%, 8.40% and 0% respectively), and the EPS will be 1.52, 1.84 and 1.99 yuan respectively. Maintain the “buy” rating.
Risk tip: there are risks that market competition intensifies, the promotion of cloud service business is not as expected, and the promotion of new products is not as expected.
