China Merchants Securities: Adjusting Baiguoyuan Group (02411) to “increase holdings” rating, management increases shareholding, demonstrating confidence in development

The Zhitong Finance App learned that China Merchants Securities released a research report saying that adjusting Baiguoyuan Group (02411) to an “increase in holdings” rating, Baiguoyuan issued an equity incentive plan and management share increase plan, which is expected to improve the company's long-term incentive and restraint mechanism, attract outstanding talents, and fully mobilize the enthusiasm of the company's executive team and core cadres; it also highlights the company's confidence in long-term business development. The company is currently in a strategic adjustment period. It is actively promoting strategic upgrading and accumulating long-term growth. It is expected that it will gradually resume same-store growth and increase the pace of store opening, and is optimistic about the company's long-term growth space.

The main views of China Merchants Securities are as follows:

The controlling shareholder plans to increase the company's shares

The company announced on December 12, 2025 that the controlling shareholder, Mr. Yu Huiyong, plans to increase his holdings of no more than 10 million H shares within the next 12 months; currently, Mr. Yu Huiyong and his controlling entity hold 736 million H shares of the company, accounting for about 36.8% of the company's issued shares; the increase in the controlling shareholder fully demonstrates their long-term confidence in the company's development.

The company launched an equity incentive plan to further bind the core team and demonstrate confidence in development

The company announced on December 1, 2025 that it will grant 150 million restricted share units to 14 employees, corresponding to 150 million shares, accounting for about 8.27% of the company's total issued shares; after this grant, the company's remaining shares that can be granted are 31.38 million shares. The share incentive was granted at HK$1.8 per share; the vesting date is April 30, 2029 (postponed if it is a non-business day). According to the announcement, the company's current equity incentive plan is mainly aimed at further establishing and improving the company's long-term incentive and restraint mechanism, attracting outstanding talents, and fully mobilizing the enthusiasm of the company's executive team and core cadres, so that the interests of the grantees are in line with the interests of the company and shareholders.

In terms of ownership conditions, the actual ownership situation is linked to the provisions of the company's restricted shareholding unit plan incentive attribution requirements and the performance evaluation conditions agreed in the reward agreement. Performance evaluation goals at the company level and individual employee level must be met, including the company's business growth, key performance indicators (linked to macroeconomics and industry conditions), and individual employee performance evaluations. Furthermore, if an employee's employment is terminated due to major irregularities (such as prosecution, disclosure of secrets, financial fraud, etc.), the unowned share unit will immediately expire. The company did not provide any financial assistance to help employees buy shares.

Risk Alerts

The opening of stores fell short of expectations, the growth rate of the same store fell short of expectations, and competition intensified.