Event: set new material released the third quarterly report of 2023. In the third quarter, the company achieved revenue of 238 million yuan, an increase of 54.29% over the same period last year, and its net profit was 37.67 million yuan, an increase of 105.54% over the same period last year, of which non-recurrent profit and loss was 1.42 million yuan, deducting non-return net profit of 36.25 million yuan, an increase of 130.08% over the same period last year.
The demand for vacuum insulation board continues to be strong, and the company's production capacity is expanded in time. Benefiting from the improvement of energy efficiency standards of household appliances in Europe and the boost of domestic demand for ultra-thin-walled and embedded refrigerators, the company has continued high order growth since Q4 in 2022, and there are certain bottlenecks in production capacity at the current stage. Considering the subsequent promulgation of new standards for energy efficiency of domestic refrigerators or a greater pull on the demand for vacuum insulation plates, at the same time, the company's products are expected to be extended to the fields of construction and non-room temperature thermal insulation in the next 1-2 years, in order to adapt to the continuous growth of downstream demand, the company has built a new vacuum insulation board production base in Hefei, Anhui Province, and it is expected that the first phase of 5 million square meters will be fully put into production in 2024. At the same time, Fujian Liancheng base may further expand the production scale and strengthen the supply capacity.
Economies of scale drive down costs and improve profit margins. In the third quarter, the company's comprehensive gross profit margin was 35.92%, which was 29.80% and 33.78% higher than the same period last year, respectively. The profit showed a trend of improvement quarter by quarter. The improvement in profit was mainly due to the improvement at the cost end. The continuous decline in raw and auxiliary materials and natural gas procurement prices and the further dilution of fixed fees under the scale effect push down the cost together. In terms of expense rate, the expense rate of single Q3 company during the period was 16.37%, an increase of 1.86pct over the same period last year, in which the rates of sales, management and R & D expenses decreased by 0.65,1.83 and 0.64pct respectively compared with the same period last year. The financial expense rate of the current period was 1.44%, which was-3.54% in the same period last year. Corresponding to the net interest rate of Q3 company, 15.84%, an increase of 3.95pct over the same period last year.
Vacuum glass is expected to contribute to the second growth pole. The company started research and development of vacuum glass at the end of 2018, planning Xiamen 2 million square vacuum glass production project, the first 200,000 square capacity production line will be put into production soon. Vacuum glass has remarkable heat preservation and energy saving effect, and can partially replace the share of hollow glass in household appliances, medical cold chain, building energy saving and other scenes. It is expected that the vacuum glass plate will officially contribute income in 2024, thus opening the second growth curve.
Profit forecast and investment advice: set New Materials is a global leader in the field of vacuum insulation panels, with stable advantages in cost, scale, technology and customers, and is the biggest beneficiary of energy efficiency improvement policies in Europe and subsequent domestic household appliances in the past two years. Fundamentals are explosive in the short term, and the new business of superimposed vacuum glass has great potential for follow-up growth. It is estimated that the company's homing net profit from 2023 to 2025 is 120 million, 170 million and 220 million respectively, corresponding to PE 28X, 20X and 15X respectively, maintaining the "buy" rating.
Risk hint: vacuum glass production schedule is not as expected risk: new material replacement risk; assumption and measurement error risk.