Yili (600887): The stock incentive plan quickly landed and the performance evaluation requirements were looser

Yili (600887): The stock incentive plan quickly landed and the performance evaluation requirements were looser

Commentary event: Yili shares announced the 2019 annual stock incentive plan. It intends to grant 182,920,025 shares in one lump sum to 474 incentive targets (including company directors, executives, core technology (business) backbone and key employees), accounting for 3 of the company’s total share capital.%, Grant price 15.

46 yuan / share.

The supplementary stock to be granted in this plan is based on 2018, and the sales restriction will be lifted in five phases. The performance evaluation goal is to deduct non-attributed net profit and its return on net assets.

First, the stock incentive plan quickly landed, covering a wide range, and improved the incentive and restraint mechanism. The company’s board of directors could pass the repurchase program on April 8, and began to repurchase the company’s shares with its own funds from May 6.Completed the repurchase of 182,920,025 shares, accounting for 3% of the total share capital. On July 25, an extraordinary meeting of the board of directors was held, and the plan on the completion of the repurchase of the company’s stock purchase was changed. Ten days later, a supplementary stock incentive plan was announced yesterday., Share repurchase and stock incentive plans quickly landed.

The plan covers a wide range of incentives, including 474 serving as directors, senior managers, core technical (business) backbones and other employees that the company considers motivating and which have a direct impact on the company’s operating performance and future development.

The purpose of the plan is to further improve the corporate governance structure, improve and improve the incentive and restraint mechanism, mobilize the enthusiasm of the operation management team, and effectively combine the interests of shareholders, the interests of the company and the interests of the core team.

The stock award price is 50% off the closing price of the trading day before the announcement, which provides sufficient incentive.

Second, considering the long period and the recent market situation, the performance evaluation requirements for unlocking sales restrictions are relatively relaxed. The shares proposed to be granted in the plan are based on 2018, and the sales restrictions will be lifted in five phases, each of which will account for 20%.The net profit rate and return on net assets attributable to mothers are required to be based on the deducted non-mother net profit in the consolidated statement caliber in 2018 as the base, and the net profit in 2019-2023 will increase (excluding the costs caused by the corresponding expenses that contribute to the incentive plan)Impact) is not less than 8%, 18%, 28%, 38%, 48% respectively; the return on net assets in each period is not less than 15%.

In 2018, the company’s operating income increased by 16.

92%, net profit attributable to mothers and net profit attributable to non-mothers increased respectively.

31% and 10.

32%, the net interest rate is obvious.

The company’s current revenue volume is huge, but only from the scale of deducting non-returning mother’s net profit, the base in 2018 is not high. With the recovery and improvement of net interest rate, eliminating the incentive for deducting non-returning mother’s net profit growth elastic competitionforce.

In view of the company’s multiple key ratios in the past three years and the first quarter of 2019: the company’s sales gross profit margin has stabilized at a high level. Although the price of raw milk has risen since the second quarter of this year, it has benefited from the continuous upgrade of the product structure.The proportion continues to increase, as well as the development of new categories and new businesses. It is still a high probability that the sales gross profit margin will continue to be high in the next few years. The sales expense ratio in 2018 has reached a stage high and will gradually improve in the future. The management expense ratio has accompanied the past.With economies of scale showing a trend of marginal improvement, improvement will remain the main trend in 2019-2023, excluding the expected incentive costs.

Taken together, after excluding the impact of incentive costs, the net sales margin is expected to continue to improve on the basis of a low base in 2018.

As long as the income continues to maintain a good growth, after deducting the non-incentive expenses, the return to the mother’s net profit will complete the probability conversion of the assessment requirements.

From the perspective of interval composite strength, the target is buffered by 8% in 2019. The assessment requirements in 2020-2023 are difficult before high and low, which is in line with the reasonable law of business development.

Another assessment indicator, the company’s ROE (extension) after deduction is maintained at a level of about 22% for a long period of time, and there is at least a significant improvement in 2019Q1.

Considering the expansion of the company’s capital expenditure in the next two years, the return on net assets will have some pressure, but from the perspective of existing and alternative space, the probability of reaching it is also very high.

From the market’s expected target analysis, the main difference is that the performance evaluation requirements are relatively loose, and the market is worried that the actual incentive effect will exceed expectations.

The root cause of the differences lies in the differences between the market and listed companies’ judgments on the industry and market’s future development trends and competitive landscape.

Whether it is considered that the assessment requirements are too loose due to emotional unacceptability, or based on the relatively difficult background of the industry and market disclosed by listed companies, market replacement time and appropriate adjustments are needed to digest.

Third, consider the impact of incentive fee vendors on the profit of the statement and lower the profit forecast. We maintain our judgment on the company’s fundamentals: revenue continues to grow rapidly, and the top five billion target in 2020 is likely to be achieved.The year may usher in an inflection point.

However, considering the non-linear amortization of incentive expenses, which will affect the profit of the statements in the next three years, we appropriately lower the company’s profit forecast.

Earnings forecast and rating: It is estimated that revenue growth rates for 2019-2021 will be 14%, 11%, and 10% respectively; profit growth rates will be 11%, 9%, and 17% respectively; and the corresponding EPS will be 1.


28, 1.


Considering the company’s fundamentals and combining short-term market sentiment, according to the 北京夜网 performance in 2019, 30 times PE is given, and the target price for the corresponding stage is 35.

00 yuan, “overweight” level.

Risk reminders: fluctuations in raw material prices; deterioration of the sales environment; food safety issues, etc.