VIP board: Due to the upgrading of energy efficiency standards, rapid market expansion can be expected. Vacuum insulation board (VIP) is a type of insulation material, mainly used for the insulation of refrigerators and freezers. The company is an industry leader. It has been deeply involved in the industry for about 20 years, leading the entire industry in terms of technology, technical quality, and market development, which in turn has driven the transformation of the entire industry.

Industry logic: demand recovery in overseas markets+energy efficiency upgrades for refrigerators forced the VIP penetration rate to increase, and the mid-term prosperity of the industry was established. 1) In 2022, China's refrigerator production accounts for about 44% of the world, and about 73% of domestic production is for the export market. Based on this, domestic refrigerator endogenous demand does not account for a high proportion, and the larger market is overseas. Further: 1. Unlike the domestic real estate cycle, major overseas economies are more resilient, and their demand base is more stable. 2. Compared with polyurethane foam insulation materials, the insulation performance of VIP boards is 6 times or higher, and VIP board production is lower in carbon and environmentally friendly. In the current context of upgrading overseas energy efficiency standards, the penetration rate of VIP export is increasing at an accelerated pace. According to EU EEI regulations, compared with 2021, the energy efficiency standards for multiple refrigeration equipment will need to be increased by 15%-20% in 2024. 3. Under the same insulation performance, the thickness of the VIP board is only 1/10 of polyurethane, which can greatly increase the volume ratio of the refrigerator. This outstanding performance not only fits perfectly with the trend of large refrigerators, but also brings about a jump in the added value of refrigerators (some data show that after using VIP plates, the manufacturing cost of refrigerators only increased by 200 yuan, driving the added value of refrigerator sales to increase by up to 50%), so refrigerator manufacturers have a strong incentive to promote VIP boards. In 2019, the global VIP board penetration rate was only about 10%. China was even lower. Benchmark countries such as Japan exceeded 70%. Based on this, accelerated penetration in the medium term can be expected.

Demand estimation: A doubling in 3 years can be expected. 1) From a global perspective, the production of refrigerators and freezers in 2022 is 210 million units, with an estimated VIP board penetration rate of 13% and market space of 8.1 billion yuan; assuming an average annual growth rate of 5% in the next 3 years, the penetration rate assumes an increase of 2 pct per year, while the usage of VIP boards in a single refrigerator increases slightly, then the global VIP board market in 2025 is about 14.8 billion yuan, which has nearly doubled compared to 2022; 2) For domestic enterprises, only consider the current target market (domestic refrigerator production and freezers): Assuming that the growth rate of demand for refrigerators sold in China in the next 3 years is 0 The penetration rate increases by 2 pct per year; the annual demand for export sales increases by 5%, and the penetration rate increases by 2 pct per year; freezers grow at an annual rate of 0, and the penetration rate increases by 2 pct per year, then the market could reach 5.6 billion yuan in 2025, about double the growth in 2022; if we further consider the increase in share in overseas markets, then the target market may be larger.

Competition pattern: VIP boards developed early abroad, and most of them are produced by home appliance companies and partially exported, such as Hitachi, Mitsubishi, and Panasonic.

However, in recent years, professional VIP board companies have developed rapidly, such as Saite New Materials, Maikolon, and German VA-Q-Tec, etc., and have become mainstream manufacturers in the market. The focus of VIP board production has gradually moved outward, and opportunities for high-quality professional VIP board manufacturers have emerged. As an industry leader, the company's VIP board sales amount in 2022 was 620 million yuan, which is the industry leader, with a share of over 20%. At the same time, compared with peers, the company's product performance is superior. Through technological innovation in the entire product chain of core materials, barrier films, and adsorbents, the company has effectively reduced costs, and a share increase can be expected.

Vacuum glass: Multi-scenario applications open up space. The amount of thick and thin distribution is that, compared with traditional insulating glass and coated glass, vacuum glass has advantages such as lower thermal conductivity (more than 2 times higher insulation performance), better sound insulation and noise reduction effects, low temperature and no fog, etc., and can be used in insulation fields such as buildings and freezers. Preliminary applications have been obtained overseas. At present, due to immature technology and high costs, domestic applications have not been achieved on a large scale. We estimate that if vacuum glass were used to replace insulating glass in a single convenience store freezer, the cost would increase by about 2,000 yuan, while vacuum glass is more energy efficient, saving about 1,400 yuan in electricity costs a year, and cost recovery can be achieved in a year and a half. Further, we estimate that the potential market for convenience stores and vending machines could reach 1.7 billion, and the field of building facades is even larger. The core factor depends on the evolution of penetration rates. The company has been deeply involved in R&D in this field for many years. The technology is mature, and customer verification is smooth. Currently, it is actively seeking to expand production. The production capacity of 2 million square meters is expected to gradually increase its contribution from 2024.

The estimated performance for 2023-2024 is 110 million yuan to 180 million yuan, corresponding to PE 33 or 21 times, covering the first time, and giving a buying rating.

Risk warning

1. Economic recovery falls short of expectations; 2. VIP board penetration falls short of expectations; 3. Vacuum glass progress falls short of expectations; 4. Capacity expansion falls short of expectations; 5. Profit forecast assumptions do not meet expectations; 5. Risk of profit forecast assumptions not being established or falling short of expectations.