The company is an export-oriented domestic commercial catering equipment leader, focusing on independent brands, and 59% of its revenue in 2022 comes from the American market. At present, the company's "intelligent French fries robot" is on trial in North American fast food restaurants. in the long run, with the progress of machine vision technology, the company is expected to open the second growth curve of North American fast food automation. The company's barriers to new business come from its traditional channel advantage in North America and the cost advantage of manufacturing in China. It is estimated that the company's annual return net profit in 2023-24-25 will be 5.6 25xPE 7.5 Universe 930 million yuan, giving the company a 2023 valuation level corresponding to the target market value of 14 billion yuan, corresponding to the target price of 34 yuan, and maintaining the company's "buy" rating.

Company profile: export-oriented domestic commercial catering equipment leader. The company mainly focuses on export business. In 2022, the operating income of the main business is 2.63 billion yuan, of which the export revenue is 2.51 billion yuan, accounting for 95.4% of the main business revenue. In 2022, the operating income of the American subsidiary was 1.57 billion yuan, accounting for about 59% of the company's total operating income. The company's revenue scale ranks first in the domestic industry. In 2022, the main business commercial refrigeration equipment revenue was 1.99 billion yuan, accounting for 75.4% of the total revenue; and the western kitchen equipment revenue was 431 million yuan, accounting for 16.4% of the total revenue.

The company has its own brand and high profit margin, with a gross profit margin of 37.8% and a net profit rate of 16.9% in 2022.

23H1 achieved an income of 1.332 billion yuan / YoY-7.0%, return net profit of 269 million yuan / YoY-3.2%.

Industry analysis: North American business catering equipment market is booming, machine vision empowerment, automation replacement market is broad.

(1) North American business catering equipment space 14.32 billion US dollars, 2011-2021 CAGR4.8%, downstream demand end market continues to grow: according to Grand View Research and New thinking data, the global commercial beverage equipment market size of 90.86 billion US dollars in 2021, 2020-2027 is expected CAGR6.7%; according to NAFEM data, North America market size will reach 14.32 billion US dollars in 2021, 2011-2021 CAGR4.8%. Among them, commercial catering refrigeration equipment accounted for the highest share of all equipment downstream, reaching 29% of the total revenue of $4.12 billion in 2021, and revenue CAGR of 7.3% in 2011-2021, significantly higher than the overall growth rate of 4.8% of the industry. The North American RPI Index (Restaurant performance Index) has been more than 100 since 21Q1. The downstream market of the industry continues to expand, 22Q4 reaches the inflection point of growth, enters the upstream cycle, and the demand for commercial catering equipment continues to grow. (2) with the progress of machine vision technology, multiple catering links can be replaced automatically: with the vigorous development of machine vision technology, the recognition ability of mechanical equipment to non-standard objects has been improved, and the cost of superimposed machine vision in the application side has been reduced. it is gradually possible to realize automatic substitution of food and beverage links such as French fries. (3) the North American business meal equipment automation market is vast, and we estimate that the potential space for manual replacement can be US $44 billion: according to our estimation, the annual labor cost of French fries in North America amounts to US $10.8 billion. The market space for artificial replacement of intelligent French fries robot reaches US $7 billion, and it is expected that the single store can achieve investment recovery within one year. Fried chicken, pancake bacon, coffee making, other beverage production and hamburger production are also large alternatives, such as the realization of automatic replacement penetration rate of 80%, we estimate that labor costs will be saved by 51.8 per cent, 51.8 per cent and 51.8 per year respectively, totaling $26.6 billion per year.

Company analysis: the traditional main business revives and opens the second track of North American fast food automation. (1) traditional business recovers, and future profit growth is expected to rise: according to National Restaurant Association, the core index RPI related to the demand side of the North American business and dining equipment market remains greater than 100, the demand side of traditional North American business recovers and continues to expand, and RPI reaches the inflection point of growth in 22Q4. The revenue of the company's two main businesses, commercial catering refrigeration equipment and western kitchen equipment, will reach 1.99 billion / 430 million yuan in 2022, with a gross profit margin of 37.9% and 39.1%. In the future, with the production of new production capacity and upward demand in the North American market, it is expected to achieve upward revenue and profit growth. (2) North American ice machine products have entered the volume cycle, with a significant growth rate: corporate ice machine products have entered the volume cycle since the second quarter of 2022. 2023H1 achieved sales of 43 million yuan, an increase of about 60% year-on-year and a gross profit margin of about 40%. This product mainly focuses on the American market and has obvious price advantage, and its market share is expected to increase significantly in the future. (3) during the commissioning of the new intelligent French fries robot in North America, it is expected to expand next year: the company's new "intelligent French fries robot" launched in 2023 can provide unmanned French fries frying solutions, including French fries storage, distribution, frying and other functions. According to the company's research, the products have been sent to the North American market for trial, and are gradually introduced to other markets. It is expected that the volume will be released next year. (4) the company has both channel barriers and low-cost competitive advantages in the field of North American fast food automation: compared with other domestic companies, the company has channel barriers to form a national sales and after-sales service network in the United States; compared with American companies, the company has obvious advantages in low cost; build a production base in Thailand and reduce the impact of US tariffs on profitability.

Risk factors: the cost of stainless steel, foaming materials and other raw materials has risen sharply, and the company's gross profit margin has decreased, affecting cash flow; international trade policies and exchange rate fluctuations have affected gross profit margin and net profit rate; market competition has intensified, new products can not meet market demand, and the company's advantages have gradually shrunk or even lost; overseas market expansion falls short of expectations, affecting the company's development speed; the increase in shipping freight affects the company's export gross profit margin. The expansion of new products such as universal steaming ovens and intelligent French fries robots is not as expected, which has a negative impact on the company's operation; the demand in the United States market is lower than expected.

Investment suggestion: the company is a leading export-oriented domestic commercial catering equipment enterprise, focusing on independent brands. In 2022, more than 90% of its business income comes from export. Since 2023, the North American RPI Index has maintained upward through the inflection point of growth, the downstream demand side of the commercial catering industry continues to expand, and the company's traditional business is expected to achieve upward revenue and profit growth. North American commercial catering equipment automation market is vast, the company's new product "intelligent French fries robot" is expected to help the company open the second growth curve of fast food automation, with good growth. We estimate that the company's annual return net profit in 2023-24-25 will be 5.6 million yuan. With reference to the valuation levels of comparable company No. 9 (2023 Wind consensus expectation PE41x), Stone Technology (2023 Wind consensus expectation PE 24x), Kovos (2023 Wind consensus expectation PE18x), compared with comparable companies, the company is in a similar growth stage, we give the company 2023 25xPE valuation level, corresponding to the target market value of 14 billion yuan, equivalent to the target price of 34 yuan, to maintain the company's "buy" rating.