Zebao's parent company pushes equity incentives again, revenue target lowered by 1 billion

In order to enhance the core strength and cohesion of employees, major companies will adopt various incentive measures, and equity incentives are a common one. Zebao's parent company Xinghui shares also took out 26 million shares for incentives this year. However, in its incentive assessment goals, we can also see the impact of the 2021 performance on the company.

Revenue target is 1 billion less, Xinghui offers 26 million shares as incentives

Recently, Zebao's parent company, Xinghui Holdings, set aside 26 million shares as part of employee incentives, covering 32 people including directors, senior managers, core technology and business personnel who were serving in the company at the time of the announcement.

According to the announcement, the first type of restricted stock is 18.5 million shares, and the second type of restricted stock is 7.5 million shares. The grant price of the first and second types of restricted stocks is 3.49 yuan per share, which means the total value reaches 90.74 million yuan. In addition, the first and second types of restricted stocks granted for the first time under this incentive plan will be subject to restricted sale in three phases at a ratio of 20%, 40%, and 40% after 12 months from the grant date.

This means that specific requirements have been made for Xinghui's future performance. The operating income in 2022 must be no less than 2.6 billion yuan, and the net profit must not be less than 50 million yuan. The operating income in 2023 and 2024 must increase by at least 26.92% and 30.30% respectively on the basis of the previous year, and the net profit must increase by no less than 160% and 61.54% respectively.

Judging from the above data, compared with the performance in 2021, Xinghui lowered its operating income this year by 1 billion, and the figure in 2021 was 3.6 billion, and the net profit was slightly increased. It can be seen that the performance in 2021 had a significant impact on Xinghui. The actual achievement of the formulated performance evaluation indicators directly affects the attribution coefficient of lifting the restriction on sales at the company level.

In addition, for employees covered by the incentive plan, there are also clear assessment results at the individual level. The individual assessment results of the incentive targets are divided into four levels: A, B, C, and D, which are the same as the evaluation results of the previous equity incentive.

Specifically, if the employee's evaluation result is above 90 (including 90), that is, the evaluation result is A, the individual's unblocking coefficient is 1. If it is between 90 and 80 (B), it is 0.9, and so on. However, if the evaluation result is less than 70 (D), the individual's unblocking coefficient will be zero. It can be seen that in terms of performance appraisal, whether it is for the company or the employee level, how to break through the existing bottleneck is a certain challenge for them.

In fact, the company's Zebao is well-known in the industry and has been mainly engaged in the design, development and sales of consumer electronic products. However, since June last year, due to the impact of Amazon's account blocking incident, its consumer electronics business has been greatly impacted. In addition, its subsequent investment in channels and brands has also made the company invest a lot of financial resources, which has also affected Xinghui's performance.

Xinghui shares also stated in the announcement that its consumer electronics business is still in the recovery period, and its revenue and profit margin will increase year by year in the later period. It can be seen that the company is not pursuing a rapid recovery, but is seeking stability gradually.

This equity incentive may be related to the decline in revenue and profits of Xinghui Shares.

Revenue and profit both declined, Xinghui shares adjusted its layout

Affected by the Amazon account blocking incident, the performance of Zebao Technology, a subsidiary of Xinghui Co., Ltd. , was impacted in the second half of 2021. In the first half of 2021, Zebao Technology's sales scale was still on the rise, so there was a lot of inventory. After the Amazon incident, in order to recover cash flow, Zebao Technology had to cut prices and promote sales. Coupled with the increase in logistics and other costs, the company is facing an intensified predicament.

Although the company has increased its layout on other platforms, it is still unable to make up for the losses it caused in the short term, and it has not yet recovered.

According to the company's previously released financial report, Xinghui shares' revenue in 2021 was 3.66 billion yuan, a year-on-year decrease of 33.74%, and the net loss attributable to shareholders of the listed company was 1.524 billion yuan. Not only last year, but also in the first quarter of this year, the situation of Xinghui shares was not optimistic, with revenue of about 588 million yuan, a year-on-year decrease of nearly 54.98%, and there was still a loss of 26.86 million yuan.

This large-scale equity incentive may also be to boost employee morale and create the same brilliant achievements as that day. Before this, Xinghui shares had also taken a number of actions.

Faced with the losses caused by the Amazon account blocking incident, the subsidiary Zebao Technology also realized the importance of the "multi-platform, multi-channel" business strategy, and actively expanded independent sites and other non-Amazon third-party platform channels to reduce dependence on a single third-party platform and expand and strengthen its own platform business and offline business.

Specifically, in 2021, Zebao Technology achieved operating income of approximately RMB 600 million through non-Amazon channels such as its own platform, Walmart platform, and offline channels, a year-on-year increase of 96.02% from RMB 315 million in 2020; its share of total cross-border e-commerce revenue was 23.83%, a year-on-year increase of 17.24%.

At present, the company's development still cannot be separated from third-party platforms, and strengthening awareness of compliance operations is increasingly valued. To this end, the company stated that it will carry out targeted compliance training for subsidiaries to enhance risk prevention awareness and ensure the healthy and sustainable development of the business.

On the other hand, Xinghui shares said that it will rely on the good cross-border e-commerce supply chain ecology established over the years to focus on creating new brand products and reshape the sales system. Through the new brand logo and image, it will empower suppliers to produce high-quality products and continue to sell them on Amazon. At the same time, the original brand products will be sold on non-Amazon platforms and offline channels.

Under the "multi-platform, multi-channel" business strategy, Xinghui Co., Ltd. will continue to deepen its presence in the mature markets of the United States, Europe, and Japan, while actively expanding into emerging markets such as Asia Pacific, increasing the proportion of offline business revenue, and exploring the domestic market, striving to establish the brand in the Chinese market.

In addition to cross-border e-commerce business, precision hardware business is also one of Xinghui Co., Ltd.'s main businesses. While cross-border e-commerce has been hit, Xinghui Co., Ltd.'s precision hardware business has grown rapidly, achieving operating income of 1.05 billion yuan in 2021, a year-on-year increase of 44.38%. The company will continue to adhere to the dual-core development strategy of cross-border e-commerce and precision hardware.

Last year, due to various factors, many leading sellers suffered losses. Whether they can reverse their losses and make a comeback in the future has become a focus of attention in the industry. Whether Xinghui shares can achieve its target this year through its equity incentive measures and continuous strategic adjustments remains to be seen.

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