Key points of investment:
We have been deeply involved in light commercial refrigeration equipment for more than ten years, and have joined the supplier lists of many well-known domestic and foreign companies. The company was founded in August 2006. Over the years, it has focused on R&D, production, sales and service of commercial cold chain equipment. It has formed a product matrix centered on commercial refrigerated display cases, commercial refrigerated display cases, supermarket display cases and commercial intelligent vending machines, and has established stable cooperative relationships with other well-known domestic and foreign enterprises such as Unilever, Mengniu, Erie, Nestle, etc., and the company's influence and market position have continued to increase.
Light commercial refrigeration equipment has reached 11.6% CAGR in the past 10 years, and segmented racetracks have blossomed a lot. According to industry online data, China's light commercial refrigeration equipment market increased from 6.15 million units in 2013 to 16.47 million units in 2022, with a CAGR of 11.6%. The overall growth rate maintained a relatively rapid growth trend, leading the cold chain equipment industry. 1) Commercial display cabinets: According to industry online data, using the other four types of products in food cabinets, beverage cabinets, ice cream cabinets, and remote refrigeration display cases, the statistical caliber achieved sales volume of 7.75 million units in '22, accounting for 47.1%, accounting for half of the light commercial refrigeration equipment; downstream mainly corresponds to dairy products, beverages and quick-frozen food, etc., and strong demand is expected to lead to a further increase in market size. 2) Supermarket display cases: After traditional supermarkets enter a period of steady development, the new retail business represented by convenience stores and warehouse-type member supermarkets bucked the trend and is expected to contribute additional volume to upstream supermarket display cases. 3) Smart vending machines: The popularity of vending machines in China is still in its early stages. According to research world data, the number of vending machines in China was only 246,200 units in 2016, rising to 924,500 units in 2021, with a CAGR of over 30%. In 2018, the number of vending machines per 1,000 people in Japan/US/Europe reached 33.44 units/20.61 units/5.61 units, respectively, while China's vending machine penetration rate was only 0.14. Compared with overseas developed countries and regions, there is still a lot of room for improvement in China's vending machine penetration rate.
Customized productivity building advantages, deeply binding ToB's major customers. The company has a rich product line, with a total product volume ranging from 46-3,500 liters, which can cover various customer needs; downstream ToB customers usually require customized services, so there are certain requirements for the supplier's production capacity and production capacity. The company can achieve efficient conversion between different products through flexible design production lines, and the accumulation of technical experience over the years has helped the company gain customer recognition. In addition to the original customers, the company has continued to develop well-known enterprise customers including Nongfu Spring since 2018, and its position in the industry has continued to improve.
First coverage, giving a “buy” investment rating. We expect the company to achieve total revenue of 32.13/37.66/4.235 billion yuan in 2023-2025, respectively, +10.6%/+17.2%/+12.4% year over year; net profit to mother of 4.00/4.93/592 million yuan, +37.0%/+23.1%/+20.2% year-on-year. We selected the three companies Haier Smart Home, Yindu Co., and Bingshan Hot and Cold as comparable companies. The valuation of the company in 2024 was 11 times, and the average PE of reference comparable companies was 15 times. Corresponding to the current market value, there is still room for a 34% increase in market value. For the first time, coverage was given, giving it a “buy” investment rating.
Risk warning: risk of raw material price fluctuations; risk of exchange rate fluctuations; risk of high customer concentration