\u3000\u3000 Suzhou Jinhong Gas Co.Ltd(688106) (688106)
Event:
Suzhou Jinhong Gas Co.Ltd(688106) announced the restricted stock incentive plan for 2022 on January 8, 2022. It is planned to grant 5.25 million restricted shares to 59 directors, senior managers and core technicians at the grant price of 27.27 yuan / share, accounting for 1.08% of the total share capital of the company at the time of announcement of the draft plan The net profit growth rate and personal performance in 2023 are the assessment indicators.
Among the granted objects, 8 directors, senior executives and core technicians account for 25.71% of the total granted amount of the draft plan, and the remaining 51 other personnel that the board of Directors believes need to be encouraged account for 54.29% of the total granted amount of the draft plan. Compared with the stock incentive plan in 2021, the number of directors, senior executives and core technicians granted remains unchanged, and the personnel overlap is high, which is the second phase of stock incentive since 2021.
Comments:
The stock incentive is divided into two assessment years: 2022 and 2023. Under the performance assessment target, the growth rate of the company’s net profit is high.
Unlike the company’s stock incentive in 2021, which takes operating income as the performance evaluation target, this stock incentive takes the growth rate of net profit relative to 2021 as the evaluation index, and defines the target values of 50%, 100% and the trigger values of 30% and 60% respectively.
In 2022, the company began to perform the supply contract of 1.2 billion yuan. The execution period of the gas supply contract is 15 years. On average, the annual contribution revenue is about 80 million yuan. Considering that the company produces gas on site and directly supplies the downstream wafer factory, it is expected that the net interest rate will be higher than the company’s retail gas supply business, which will effectively thicken the company’s performance and lay a foundation for realizing the performance evaluation goal of stock incentive.
The company is an important supplier of special gases and bulk gases in China. According to the statistics of China Industrial Gas Industry Association, the company’s sales in 2017-2019 ranked first in the statistics of private gas industry enterprises of the Association for three consecutive years. The stock incentive plan shows the company’s confidence in long-term development, and the company’s growth attribute in the future deserves attention.
Profit forecast and Valuation: it is estimated that the company’s EPS from 2021 to 2023 will be RMB 0.45/0.71/1.09 respectively, and the current price corresponding to PE will be 57.17/36.23/23.72 times respectively. The company is a leading private gas company in China, with obvious technical advantages. With the acceleration of import substitution of electronic special gas, the company has entered the Semiconductor Manufacturing International Corporation(688981) supply chain, and its development is expected to accelerate in the future. Maintain the “buy” rating.
Risk warning: the price of raw materials fluctuates greatly; Brain drain risk; Market development is less than expected
