Core views

China's current energy efficiency standards for refrigerators released in 2015 have been released for nearly ten years. Recently, the new national standard has entered the drafting stage. The energy efficiency standards for refrigerators are expected to be greatly optimized to match the international level, bringing the domestic vacuum insulation board market demand expansion, and the company is expected to fully benefit as an industry leader; currently European demand continues to grow, driven by policies, and the company's production expansion project in Anhui is about to be put into operation to match strong demand; the company's vacuum glass project is expected to enter the mass production and release stage this year.

occurrences

According to the National Standard Information Public Service Platform, on December 28, 2023, the new generation “Household Refrigerators Electricity Consumption Limits and Energy Efficiency Classes” began to be drafted.

Brief review

Drafting of a new national standard for energy efficiency of refrigerators has begun. The penetration rate of domestic VIP boards is expected to explode on December 28, 2023. The National Standardization Administration Committee issued a revised plan for the “Household Refrigerators Electricity Consumption Limits and Energy Efficiency Levels”. The energy efficiency standard for next-generation refrigerators officially entered the drafting stage, and 18 organizations including the China Institute of Standardization and Qingdao Haier have jointly drafted it; judging from the impact, the new national standard is expected to be released around April 2025; judging from the impact, China's refrigerators are currently in operation GB12021.2-2015 energy efficiency standards released in September 2015 have not been updated in domestic industry standards for nearly ten years, and there is a big gap with other countries.

According to “Refrigeration and Air Conditioning”, since the EU's new energy efficiency label came into effect in 2021, China's current energy efficiency standard Class 1 or Class 2 products only correspond to the EU's D, E, and F class energy efficiency, and the overall gap is huge. It is expected that the new national standard for refrigerator energy consumption currently being drafted will be in line with international standards, and energy efficiency standards will be greatly optimized; considering that the current domestic VIP board penetration rate is extremely low, the new national standard is expected to usher in rapid growth after the new national standard, and the company is expected to fully benefit as an industry leader.

European demand continues to be released. According to the European Commission's estimates, household refrigerators and freezers with energy efficiency grade F will gradually be phased out after the implementation of the new energy efficiency regulations, and the share of A, B, and C grade products will gradually increase before 2030, leading to an increase in demand for VIP boards;

The company raised a 5 million square meter VIP board production expansion project in Anhui to be put into operation to solve the current tight supply problem and match demand volume.

The vacuum glass project continues to advance, creating a second growth curve

Vacuum glass is expected to gradually replace insulating glass in the fields of construction, home appliances, transportation, etc. due to its excellent thermal insulation, energy efficiency, sound insulation, ultra-thin, and anti-condensation properties, reaching the 100 billion market. The company has developed vacuum glass products based on vacuum insulation technology, which is expected to form a good customer & technical synergy with the main business. At present, the company has basically completed the construction and installation of the second vacuum glass pilot line, will soon verify the mass production process, and continue to promote the construction of a 2 million square meter vacuum glass project.

Profit forecasting and valuation: The company's main business benefit policy is driving high demand. Production capacity expansion is about to meet strong demand, and at the same time, the vacuum glass space is vast and enters the mass production and volume stage. Net profit for 2023-2025 is expected to be $1.18, 2.08 million, and 398 million yuan, respectively. Corresponding PE is 32X, 18X, and 10X, respectively, maintaining a “buy” rating.

Risk warning:

Prices of raw materials fluctuated greatly; downstream demand fell short of expectations; capacity construction fell short of expectations; the international situation fluctuated greatly, etc.