Dongfang Yuhong (002271) Commentary on Major Events: Revision of Equity Incentive Plan Increases Appraisal Conditions for Accounts Receivable, Keeps Growth More Quality

Core point of view The company announced the revision of the third phase of the stock incentive plan budget, increasing the company’s account receivables from 2020 to 2023. The growth rate of the company’s operating income growth rate gradually exceeds the assessment target of the year’s operating income growth.Improvement, the quality of operation is expected to rise in the future.

   Event: On September 28, 2019, the company announced the “Phase III Supplementary Stock Incentive Plan (Revised Revised Draft)” to revise the company’s performance appraisal of equity incentive expenditure.

The revised draft supplements the assessment requirements: from 2020 to 2023, the incremental growth rate of accounts receivable of the company is lower than the growth rate of operating income for the year.

   Evaluation of new accounts receivable growth rate, with the goal of improving cash flow: the company ‘s historical revenue has grown rapidly, and its capital expenditures have increased at the same time as rapid development, especially since the PS strategy was implemented at the end of 2015 to expand revenue scale and increase revenue growth to salesThe KPI assessment weight of personnel should increase the accounts receivable more.

In the seven years from 2012 to 2018, the company’s accounts receivable grew at a faster rate than revenue growth for a total of five years, and cash flow has become the most worrying issue for investors.

The company’s newly added exercise conditions for the growth of accounts receivable show its determination to improve cash flow.

   Expand the scope of incentives to a large number of sales personnel, and jointly control the accounts receivable: The company expanded the scope of incentives, the personnel to be stimulated involved the backbone of sales in various regions of the company, of which a total of 938 sales personnel, accounting for 42 of the total incentives.

9%, a 6% increase in the proportion of sales staff compared to the second equity incentive.


The company starts with the sales staff most deeply involved in accounts receivable. It will reduce the slackness and tolerance of sales staff in the form of internal control and incentives. The employees will jointly control the accounts receivable and improve the quality of revenue.To ensure stable cash flow.

   Risk factors: the gradual fluctuation risk of real estate investment, the risk of rising raw material prices, the risk of macroeconomic fluctuations, and the risk of receivables recovery.

   Profit forecast and investment suggestions: The company revises the equity incentive plan, increases the corresponding assessment indicators for the growth rate of receipts and accounts, and controls the problem of excessive receivables from the company’s internal equity incentives to prevent operating risks and improve operating quality.

The company expects the company’s performance to increase as well as the room for continued growth, given the quality of premium growth.

Based on this, maintaining the 2019-2021 revenue forecast of 194 trillion, 257 trillion, and 336 trillion, the company’s net profit attributable to the parent in 2019-2021 is expected to be 21.

4.1 billion, 26.

7.3 billion, 33.

51 ppm, maintaining EPS forecast for 2019-2021 at 1.



25 yuan, given a target price of 25.

83 yuan, maintain “Buy” rating.