Description of the event

In 2023, the company achieved operating income of 840 million yuan, an increase of 31.69% over the previous year, and attributed net profit of 106 million yuan, an increase of 65.48% over the previous year.

Incident comments

Strong demand supports the company's high performance growth. Thanks to improved energy efficiency standards for refrigerators in developed countries and regions and the upgrading of domestic refrigerator consumption structures, demand in the vacuum insulation board market was strong during the reporting period, and the company's sales performance continued to improve. The company's sales volume is expected to increase significantly year on year, and eventually achieved a 31.69% year-on-year increase in revenue. The company's operating profit margin increased by 3 pcts in 2023, mainly due to a decrease in raw material costs and natural gas costs. At the same time, as the company's overall capacity utilization rate increased and economies of scale were further exploited, the company's annual net profit achieved relatively rapid growth, and the final annual performance increased 65.48% year on year.

Looking at a single quarter, the year-on-year revenue growth rates for the four quarters of '23 were 1.5%, 30%, 54%, and 39%, respectively, and there was a marked acceleration since Q2. Single-quarter results were 0.1, 0.3, 0.38, and 0.26 billion, respectively.

Looking ahead to 2024:1. On the VIP side, the market sentiment under the European bid upgrade is still accelerating, and new breakthroughs are expected in the Japanese and Korean markets. As far as the company is concerned, production and sales are currently at full capacity, and the construction of the new base in Anhui is going smoothly. It is expected that 24Q2 will be released, and the gradual release of production capacity is expected to contribute significantly to the company's performance increase in 2024. Within the entire industry, the company has accumulated strong technology, technology, and cost advantages, and can also take the lead in this boom cycle to achieve another shift in share through a greater pace of expansion. 2. The vacuum glass business is progressing steadily, and it is expected to gradually achieve the second growth curve performance.

As for the company's core business, the VIP industry itself, we believe that growth in the medium term is still quite outstanding. 1. China's refrigerator production is mainly aimed at the export market. Unlike the domestic real estate cycle, major overseas economies are more resilient and the demand base is more stable. 2. Compared with polyurethane foam insulation materials, VIP boards have higher insulation performance, and VIP board production is lower carbon and environmentally friendly. In the current context of upgrading overseas energy efficiency standards, the penetration rate of VIP export sales is increasing at an accelerated pace. 3. Under the same insulation performance, the thickness of the VIP board is far lower than that of traditional polyurethane, which can greatly increase the volume ratio of the refrigerator. This outstanding performance not only fits perfectly with the trend of larger refrigerators, but also brings about a jump in the added value of refrigerators, so refrigerator manufacturers have a strong incentive to promote VIP boards. Currently, the global VIP board penetration rate is low, and China is even lower. Benchmark countries such as Japan are already mature in use. Based on this, accelerated penetration can be expected in the medium term.

The 2024-2025 performance is expected to be 165 million and 217 million, corresponding PE is 21 or 16 times, and the purchase rating.

Risk warning

1. VIP board penetration falls short of expectations; 2. Vacuum glass progress falls short of expectations.