\u3000\u3000 Jack Sewing Machine Co.Ltd(603337) (603337)
Events
The company issued the 2022 stock option and restricted stock incentive plan (Draft), which plans to grant a total of 9.5 million rights and interests to incentive objects, accounting for 2.1% of the total share capital; Among them, 7.71 million were granted for the first time, accounting for 81.2% of the total number of incentive plans. The stock option exercise assessment years of the incentive plan are 2022, 2023 and 2024. If the cumulative operating income is not less than 8.1 billion yuan, 19 billion yuan and 33.8 billion yuan or the cumulative net profit is not less than 850 million yuan, 2 billion yuan and 3.5 billion yuan, 100% of the exercise proportion will be unlocked; Meeting the assessment objectives of cumulative operating income of no less than 6.9 billion yuan, 14.8 billion yuan, 24 billion yuan or cumulative net profit of no less than 690 million yuan, 1.48 billion yuan and 2.4 billion yuan will unlock 60% of the exercise proportion.
Key investment points
Release the equity incentive plan to highlight the company’s confidence, attract excellent talents and stimulate business vitality
The incentive plan includes stock option incentive plan and restricted stock incentive plan. In the part of stock option incentive plan, it is proposed to grant 4.75 million stock options to incentive objects, accounting for about 1.1% of the total share capital; Among them, 3.86 million were granted for the first time, accounting for about 81.2% of the total number of stock options to be granted under the incentive plan. In the part of restricted stock incentive plan, it is proposed to grant 4.75 million restricted shares to incentive objects, accounting for about 1.1% of the total share capital; Among them, 3.86 million restricted shares were granted for the first time, accounting for about 81.2% of the total number of restricted shares to be granted under the incentive plan. The total amortization expenses of some stock options and restricted shares granted by the company for the first time are RMB 75.05 million, and the amortization expenses from 2022 to 2025 are RMB 35.9 million, RMB 25.19 million, RMB 12.23 million and RMB 1.72 million respectively. The exercise price of stock options granted for the first time in the incentive plan is 18.17 yuan / share, and the grant price of restricted shares is 12.12 yuan / share; The total number of incentive objects is 219, which are directors, senior managers, core managers and professionals who served in the company when the company announced the draft incentive plan.
To meet the conditions for unlocking the 100% exercise proportion, it is necessary to achieve the assessment objectives of operating revenue of no less than 8.1 billion yuan, 10.9 billion yuan, 14.8 billion yuan (CAGR 22.3%) or net profit attributable to the parent company of no less than 850 million yuan, 1.15 billion yuan and 1.55 billion yuan (CAGR 22.2%) in 2022, 2023 and 2024 respectively; To meet the conditions for unlocking 60% of the exercise proportion, it is necessary to achieve the assessment objectives of operating revenue of no less than 6.9 billion yuan, 7.9 billion yuan and 9.1 billion yuan (CAGR: 9.7%) or net profit attributable to the parent company of no less than 690 million yuan, 790 million yuan and 900 million yuan (CAGR: 9.3%) in 2022, 2023 and 2024 respectively.
The company’s industry is a knowledge intensive industry highly dependent on professionals. The implementation of this incentive plan aims to further establish and improve the company’s long-term incentive mechanism, attract and retain excellent talents and fully mobilize the enthusiasm of the company’s employees.
The demand boom of sewing equipment industry is expected to continue, and the leading market share is expected to further increase
The main reason for the pressure on the company’s performance in the third quarter of 2021 is the superposition of overseas epidemics in the off-season of the industry (the cities and countries of equipment consumers such as Vietnam, Bangladesh and India are closed). It is expected that the first half of 2022 will continue the strong sales in the fourth quarter of 2021, mainly due to the improvement of profitability due to the recovery of international trade demand and the superposition of production expansion layout and price adjustment of leading competitors. With the smooth implementation of the company’s complete set of intelligent equipment, the company’s comprehensive production capacity and efficiency are expected to be greatly improved. Since the second half of 2020, the prosperity of the industry has continued to rise. The recovery of production and sales of the company is better than that of its peers. At present, the production capacity has exceeded the highest level in 2017. The recovery of industry demand and the demand for reserves brought by the hierarchical marketing will further improve the production capacity of the company. As the leader of sewing equipment, the market share still has room to improve.
Profit forecast and valuation
We adjusted the company’s profit forecast. It is expected that the company will realize a net profit attributable to the parent company of 4.6/7.7/9.7 yuan from 2021 to 2023, with a year-on-year growth rate of 47% / 68% / 25%, corresponding to EPS of 1.03/1.73/2.17 yuan and PE of 26 / 15 / 12 times. Maintain the “buy” rating.
Risk tips
Overseas recovery did not meet expectations, raw material prices rose, and exchange rate fluctuations
