\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 51 Gree Electric Appliances Inc.Of Zhuhai(000651) )
Event: the company plans to adjust the performance and net profit assessment indicators of the first phase of employee stock ownership plan, and increase the assessment indicators of return on net assets at the same time.
Before adjustment: the first vesting period: the net profit in 21 years increased by no less than 10% compared with that in 20 years, and the cash dividend per share in that year was no less than 2 yuan or the total cash dividend was no less than 50% of the net profit in that year. The second vesting period: the net profit of 22 years is no less than 20% higher than that of 20 years, and the cash dividend per share is no less than 2 yuan or the total cash dividend is no less than 50% of the net profit of that year. At the expiration of the first assessment vesting period, if the company’s performance assessment indicators do not meet the standards, all the attributable shares in the first period will be deferred to the second assessment vesting period for combined assessment. If the company’s performance assessment indicators meet the standards in the second assessment vesting period, and the total net profit in 21 and 22 years will not be less than 230% of the net profit in 20 years.
After adjustment: the first vesting period: the net profit in 21 years is no less than 1 billion yuan higher than that in 20 years, and the cash dividend per share is no less than 2 yuan or the total cash dividend is no less than 50% of the net profit in that year; The total cash dividend of the company in the current year shall not be less than RMB 2.2 billion, and the net profit per share in the second year shall not be less than RMB 2.2 billion, or the net profit rate in the second year shall not be less than RMB 2.2 billion. At the expiration of the first assessment vesting period, if the company’s performance assessment indicators do not meet the standards, all the attributable shares in the first period will be deferred to the second assessment vesting period for combined assessment. If the company’s performance assessment indicators meet the standards in the second assessment vesting period, the sum of the increase of net profit in 21 and 22 years over the net profit in 20 years will not be less than 3 billion yuan.
Event: the company launched the second phase of employee stock ownership plan. The capital scale of the employee stock ownership plan does not exceed 1.55 billion yuan, and the stock scale does not exceed 1.60% of the current total share capital. The price of the employee stock ownership plan to buy back shares of the company is 16.36 yuan / share. The duration of the employee stock ownership plan is 3 years.
Performance assessment objective: the first attribution period: the net profit in 2022 will increase by no less than 2 billion yuan compared with that in 2020, and the return on net assets of the company in 2022 will not be less than 22%, the cash dividend per share of the current year will not be less than 2 yuan, or the total cash dividend will not be less than 50% of the net profit of the current year. The second vesting period: the net profit in 2023 will increase by no less than 3 billion yuan compared with that in 2020, and the return on net assets of the company in 2023 will not be less than 21%, the cash dividend per share of the current year will not be less than 2 yuan or the total cash dividend will not be less than 50% of the net profit of the current year.
Completion of 21 years: before modification, the assessment target of 21 years was 22.175 1.1-0.35 = 24.358 billion, after modification, it was 22.175 + 10-0.35 = 23.14 billion. The actual performance of the company in 21 years was 23.064 billion yuan. Therefore, the assessment of 21 years was not achieved, and the difference was 76 million yuan. 22 year target: in the adjusted draft of the first phase assessment, if the 21 year assessment is not achieved, the revised 22 year target is 221.75 + 20 + 0.76 (the difference not completed in the first phase) -3.94 (the 22-year amortization in the first phase) -581 million (581 million is the amortization expense of the proposed phase II shareholding plan in 2022) = 23.276 billion. 23 year target: in the draft of phase II shareholding plan, the 23 year target = 221.75 + 30-1.27 (phase I legacy amortization) – 7.75 (phase II amortization) = 24.273 billion. In addition, the situation of not meeting the standard in 22 years and transferring to meeting the standard in 23 years will not be discussed for the time being. Other differences: phase II does not require employees to hold until retirement, while phase I retains holding until retirement; Ms. Dong Mingzhu, the chairman, did not participate in the phase II shareholding plan. (the above calculation, especially the amortization expense of phase II, depends on the amount subscribed during the implementation of phase II and the time point)
Investment suggestions: on the one hand, as a leader in the air conditioning industry, the company is deepening channel reform and gradually restoring brand competitiveness. In the future, with the gradual easing of factors inhibiting industry demand such as real estate downturn and cost, the growth rate of the company’s revenue performance may increase. On the other hand, the company diversified frequently, developing energy storage, thermal management and other businesses, which is expected to open the second growth curve and develop into a diversified industrial group. We have appropriately raised the expense rate of the company. It is estimated that the net profit of the company in 22-24 years is 23.5/243/25.8 billion yuan (the previous value is 27.5/299/31.5 billion yuan), corresponding to pe8.8 billion yuan 4 / 8.1 / 7.6x, maintain the “buy” rating.
Risk tips: macroeconomic growth slows down, overseas demand is less than expected, raw material price fluctuation risk, there is a risk that the performance evaluation of employee stock ownership plan cannot be achieved, and there is uncertainty in the approval and elements of employee stock ownership plan.
