The popularity of AI continued from the beginning of the year to the middle of the year. Recently, the A-share market has surged with a "NVIDIA craze", and related stocks have also been singing all the way, Hongbo shares (002229. SZ) is one of them.
On the evening of June 13, Hongbo Co., Ltd. released the 2023 restricted stock incentive plan, the number of restricted shares to be granted to incentive recipients under this incentive plan is 6.5 million shares, accounting for about 1.30% of the total share capital of the company of 498 million shares on the date of announcement of the draft incentive plan.
Generally speaking, equity incentives, as a means for companies to attract and retain outstanding talents, and fully mobilize the enthusiasm and creativity of senior managers and core key employees, should be beneficial to the company. However, secondary market investors do not seem to buy this, the stock opened sharply lower today, then volatile lower, once fell to 8% during the session, as of the close of June 14, the stock price closed at 35.07 yuan, down 6.8%, with a total market value of 17.3 billion yuan.
Titanium Media APP noted that the reason why it is difficult to stop the adjustment may be that the company's recent news is not calm. It is reported that on June 12, the company's controlling shareholder was forced to liquidate his position, and this news continues to ferment; On the evening of June 13, a screenshot of a WeChat public account titled "Risk Warning Announcement on Hongbo Shares Entering the Delisting and Finishing Period Trading" quickly spread on the Internet. Although it was later debunked as a headline editing error, it has already sparked panic.
In addition, today's adjustment decline may also be related to the short-term increase in the company's share price. Based on the above background, investors may be worried about the current high stock price, so they began to sell stocks to hedge.
The incentive target is AI personnel, and the completion of the assessment is entrusted to InBev Mathematics
According to the equity incentive (draft) of Hongbo Co., Ltd., there are a total of 11 incentive targets, including directors and senior managers of the company and its subsidiaries, as well as the core business backbone of InBev Digital (a subsidiary of Hongbo Co., Ltd., mainly focusing on AI business). Among them, Li Ning is the company's director, deputy general manager, executive director and legal representative of InBev Digital, Zhou Weiwei is the company's deputy general manager, responsible for the company's business in the artificial intelligence AI sector, and the remaining 9 are key personnel of InBev Mathematics.
The grant price of restricted stock is $18.92 per share. As of the close of trading on June 14, the share price of Hongbo shares was 35.07 yuan. The grant price of Hongbo shares is equivalent to the current price, which is close to discounting. In fact, it was not uncommon to have discounted equity incentives during the year, such as Wen (300498. SZ), EVE Lithium Energy (300014. SZ), CATL (300750. SZ) has previously thrown out incentive plans with grant prices close to discounts, and even many companies have thrown low-price incentive schemes such as "0 yuan purchase" and "1 yuan purchase" earlier, which has also attracted the market's attention to the reasonableness of equity incentive pricing.
However, compared with the pricing, the unlocking conditions of Hongbo shares are more conspicuous. As a director and senior officer of the company, evaluate the performance targets of the company level and InBev Digital, the first lifting period is 2024, the operating income of listed companies in that year is not less than 597 million yuan, and the operating income of InBev Digital in 2024 is not less than 273 million yuan; the second lifting period is 2025, the operating income of listed companies in the year is not less than 651 million yuan, and the operating income of InBev Digital's 2025 is not less than 327 million yuan. The 9 core business (technical) backbone personnel of InBev Digital, only assess the performance targets of InBev Digital, and the target revenue is the same as above.
From the above data, Hongbo may not only intend to convey InBev Digital's profit expectations to the market, but also seems to pin its performance hopes on InBev Digital's business.
In fact, as early as November 17, 2022, Hongbo issued an equity incentive plan, and the incentive target at that time was named Zhou Weiwei, the core backbone personnel of the company (including subsidiaries), and the number of restricted shares granted was 850,000 shares, accounting for about 0.17% of the company's total share capital. It is reported that the corresponding performance assessment targets were set at that time, and the operating income in 2023 and 2024 was not less than 569 million yuan and 597 million yuan respectively.
For example, the equity incentive set up by "special personnel" has also attracted the attention of the Shenzhen Stock Exchange. Subsequently, the Shenzhen Stock Exchange issued a letter of concern, requiring the company to explain the method and reasonableness of the selection of incentive recipients, the basis for confirming the number of restricted shares granted, the matching of its contribution degree, and whether there is a situation of benefit transmission.
At the same time, given that the revenue of Hongbo shares in 2021 has exceeded 574 million yuan, the future performance assessment target is even lower than the income of two years ago? The Shenzhen Stock Exchange requires that combined with the company's business development and financial data in recent years, explain the basis for determining the performance assessment target, the reasons and reasonableness of the basic flat compared with 2021, and whether the incentive effect can be achieved.
Stock prices went from calm to hype
Hongbo's ability to become an "NVIDIA concept stock" is related to its Beijing AI Innovation Empowerment Center project.
On August 15, 2022, Hongbo Co., Ltd. announced that it signed a "cooperation agreement" with Zhongguancun Zhongheng Cultural Science and Technology Innovation Service Alliance, NVIDIA and InBev Digital, to jointly establish the Beijing AI Innovation Empowerment Center and cross the border in the field of artificial intelligence. As a result, Hongbo not only hitched a ride on the AI concept, but also fell on ChatGPT's US stock giant NVIDIA.
Among them, Hongbo shares provide funds, NVIDIA is responsible for technology, and the whole team is set up through InBev Digital to carry out industrial investment, cultivation and operation. At first, after the above-mentioned cooperation was made public, it did not cause a significant splash in the market. From August 2022 to January 20, 2023, the company's stock price fluctuated around 6 yuan to 8 yuan as a whole, and the trend was calm. The turning point occurred in late January this year, from January 20, the stock price of Hongbo shares began to enter a skyrocketing range, once rising from 6.72 yuan to 39.51 yuan on June 12, a five-month increase of 487.95%, becoming a dark horse in the capital market.
The reason for the sharp rise in its stock price may be related to the market's pursuit of ChatGPT concept stocks and AI concept stocks. The research report shows that AI is the future trend, and computing power is an important hardware foundation in AI. The core of computing power is the GPU, which determines the calculation speed of large models. In comparison, the current development of Chinese GPUs still has a long way to go. NVIDIA is a well-known GPU manufacturer in the world. Therefore, this cooperation is indeed a big benefit for Hongbo shares.
Another background is that NVIDIA achieved revenue of $7.19 billion in the first quarter of this year, exceeding previous market expectations of $6.52 billion, and expects revenue of $11 billion in the second quarter, fluctuating 2%, significantly exceeding market expectations. Stimulated by this, NVIDIA's stock price rose sharply. This, in turn, may also stimulate the share price of its "distant relative" Hongbo shares in the A-share market.
In fact, during the surge in Hongbo's shares, the titanium media APP found that the cooperation with NVIDIA at that time was only an agreement, and the 2022 annual report showed that the Beijing AI Innovation Empowerment Center would not be available until after December 31, 2025, but because it literally involved NVIDIA and AI, the stock price soared.
Some secondary market people told the titanium media APP that after ChatGPT triggered the wave of AI, domestic technology giants got on the car, self-developed AI large models entered the stage of a hundred flowers, and the computing power arms race also kicked off, but for a specific company, its future industrial profit monetization ability remains to be seen. Therefore, investors must remain rational about such theme stocks and should not chase too much to prevent the chicken feathers that flew into the sky from suddenly falling.
Is cross-border AI virtual or real? Regulators are also questioning
Holding hands with NVIDIA, Hongbo cross-border AI is virtual or real? The follow-up may also depend on how the two sides work together.
First of all, cooperation is a two-way choice. For NVIDIA, the Chinese market is certainly a huge cake. Market news shows that NVIDIA has established AI innovation empowerment centers in four cities: Wuxi, Nanjing, Lishui and Beijing. In order to open up the Chinese market, the demand resources and financial strength of the collaborators are important decisive factors. If resources are insufficient, they risk being replaced.
Secondly, in the specific cooperation, InBev Mathematics mainly provides two businesses: computing power rental and high-end AIDC (automatic identification and data collection) one-stop service. Among them, in the computing power rental business, InBev needs to purchase high-performance computing power equipment such as GPUs and DGX from NVIDIA, and then form Superpod DGX for leasing. In fact, in addition to Hongbo shares, there are many NVIDIA concept stocks such as Industrial Fulian, TZTEK Technology, and Yakang in the market. Among them, procurement is the most common partnership, but judging from the relevant announcements, most of the so-called concepts themselves do not have actual business support.
It's worth noting that working with NVIDIA may also have concerns. Because the supply chain will be affected by Sino-US relations, after all, Sino-US relations are uncertain, if the relationship is tense, will it have a huge negative impact on the company's procurement of computing power equipment? In response to the above questions, Titanium Media APP called Hongbo shares as an investor to inquire, and the listed company replied that there was such a risk, and when asked whether the occurrence of such a risk would affect the company's performance, the company said that it might have an impact.
Finally, bet on InBev Digital, but there is still great uncertainty about its business landing. In the short term, InBev Digital has become a lifesaver for Hongbo, if its development is not as expected, where will Hongbo go? The quarterly report for the first quarter of this year shows that the company's net profit is -18.25 million yuan, down 42.7% year-on-year, and from the financial data, the performance of Hongbo shares with AI support is still not reflected.
In fact, the regulator also questioned the reality of Hongbo's AI business.
On May 26, 2023, the Shenzhen Stock Exchange issued the "Inquiry Letter on the 2022 Annual Report of Hongbo Co., Ltd." It involves the company's operating income, net profit, non-recurring profit and loss items, monetary funds, other non-current assets, other receivables, stock incentive plans, artificial intelligence technology projects and other issues.
Among them, it is related to projects in the field of artificial intelligence technology. The inquiry letter requested the company to provide additional information on 5 aspects. Explain the target customers and profit model of the empowerment center project, the capital investment plan and return on investment period, and the project benefit measurement. Explain the main business threshold of the company's empowerment center. Supplement the specific cooperation mode with NVIDIA and the stability of cooperation, risks, invested funds, proportion of the company's business and orders in hand.
and the specific situation of the equipment provided by NVIDIA to the company, explain the expected impact of the empowerment center business on the net profit in 2023, and whether there are corresponding technical and talent reserves to implement the above projects.
These issues can be said to be the core and essence of Hongbo's AI project and cooperation with NVIDIA. In response to the Shenzhen Stock Exchange's inquiry, Hongbo announced on June 2, 2023 that it postponed its response to the Shenzhen Stock Exchange's 2022 annual report inquiry letter. To date, I still haven't seen an official response from the company. (This article was first published on Titanium Media App, author|Zhai Zhichao)