AVIC Optoelectronics (002179) Company Comment: Second Phase Stock Incentives Unprecedented in State-owned Enterprise Growth and Regained Blessing

AVIC Optoelectronics (002179) Company Comment: Second Phase Stock Incentives Unprecedented in State-owned Enterprise Growth and Regained Blessing

Investment Highlights The company released the “Stock Incentive Plan (Second Phase)” on November 18, and the company intends to award 3206 to incentive objects.

50,000 shares of stock.

The number of employees involved in the employee shareholding plan was 1,215, of which 10 were directors, supervisors, and senior management. The price of the company’s shares obtained through non-trading transfer was 23.

43 yuan / share, the duration of the shareholding plan is 48 months.

  The company’s shareholding plan is another employee incentive after the end of employee incentives in 2016, showing the leader’s firm confidence in the company’s long-term development and a positive attitude towards employee incentives.

The company’s incentive reward shares as a percentage of the company’s share capital (3.

0%) higher than the recent incentive plans of AVIC Shen Fei, Philips, Steel Research Gaona, showing the company’s strong incentives for employees.

  The launch of the stock plan lasts for 60 months, with a lock-up period of up to 36 months. It will be unlocked in 3 phases after 24 months from the grant date, and each unlocked 33 after completing the unlocking conditions.

3%, 33.

3%, 33.

4%.

In this employee shareholding plan, the company’s net profit after deducting non-return to the mother in the financial year immediately before the unlocking date is not less than 10% of the compound performance in 2018. As a performance evaluation goal, the company will achieve at least non-return after 2020-2022, respectively.Parent net profit 10.

7.1 billion, 11.

7.8 billion, 12.

9.6 billion.

If the amortization of the expenses of the shareholding plan is considered, the company will achieve at least the non-returned net profit before deduction of the shareholding plan expenses from 2020-2022.

4.9 billion, 13.

5.4 billion, 13.

900 million.

In addition, the company’s performance needs to meet: 1) The company’s return on net assets in the financial year immediately before the unlockable date is not less than 13.

60%, and not lower than the 75th place value of the benchmarking enterprise; 2) The completion of the company’s EVA (Economic Growth Value) indicator for the financial year immediately before the day reached the assessment target issued by the aviation industry, and △ EVA was greater than 0.

  The company is the leader in military connectors.

The demand for military connectors is expected to continue to accelerate in the next two years 四川耍耍网 after the 13th Five-Year Plan; the civilian communications direction will continue to account for the second half of the market, and accompanied by the localization of Huawei’s supply chain, the company’s high-speed backplanes and other high-end connectors will significantly increase the proportion, Expected volume and price of the communications sector are rising.

Therefore, we maintain our profit forecast and expect the company’s net profit for 2019-202111.

74, 14.

59, 17.

5.5 billion.

  The company’s convertible bonds were delisted on November 7, and the total share capital increased to 10.

7 billion shares, corresponding to a PE of 35/28/24 times in 2019-2021 (2019/11/18), maintaining the level of “prudent increase”.

  Risk Warning: The development of high-end civilian products business exceeds expectations; the growth rate of military demand is lower than expected