Key points of investment
The company is a provider of systematic solutions in the field of vacuum insulation and energy saving, and a leading vacuum insulation board company. The main business covers R&D, production and sales of downstream application products such as vacuum insulation panels (VIP), ultra-fine glass wool cores, vacuum glass (VIG), barrier films, adsorbents, vacuum packaging products, and insulation boxes, etc., to serve the global refrigerator industry and expand various applications such as cold chain and construction. The foreign market is the main consumer market for vacuum insulation panels. The company's direct export sales revenue in the first half of 2023 accounted for 57.3%.
Demand for vacuum insulation panels is expected to remain high, and the construction of the company's new base will solve the problem of production capacity bottlenecks and support continued high profit growth in the main business. (1) On the one hand, the penetration rate of vacuum insulation panels in the refrigerator industry is still low, and the new EU energy efficiency regulations are expected to significantly accelerate their penetration rate increase. As manufacturers improve the layout of energy-efficient products and energy efficiency classification guide consumers to choose energy-efficient products, there is plenty of room for growth in high-grade products in the EU market, which in turn is driving demand for vacuum insulation panels. On the other hand, benefiting from factors such as easing high overseas inventories, falling shipping and raw material costs, falling interest rates, and recovering consumer confidence, external demand for refrigerators is expected to continue to improve; in addition, domestic demand is expected to remain stable, benefiting from consumer promotion policies and the trend of large-volume refrigerators. We expect demand for vacuum insulation panels to continue to be high. (2) With demand picking up rapidly, the company's vacuum insulation board production capacity utilization rate reached 98.1% in the first half of 2023, making it difficult to fully meet incremental demand. The company implemented the expansion of production at the Liancheng headquarters and the construction of a new base with an annual output of 5 million square meters. It is expected that after the 2024 Spring Festival, the Anhui plant will gradually release additional production capacity starting in April, and the company's vacuum insulation board production capacity is expected to increase by more than 60% compared to the 2023 mid-year report. Considering the high demand and the release of production capacity, the company's main vacuum insulation board business profits are expected to continue to grow rapidly.
The cultivation of new vacuum glass products continues to advance, and it is expected to form a second growth curve. Based on the accumulation of vacuum insulation technology, the company has outstanding advantages in exploring core processes and product performance development for vacuum glass production, and is steadily promoting mass production and downstream application development of vacuum glass. The wholly-owned subsidiary Weiaiji Vacuum Glass Industrialization Base has recently completed plant capping. After the project is completed and delivered, it is expected to produce 2 million square meters of vacuum glass per year. In the first half of 2024, the base will first build two new production lines, with a total annual production capacity of about 400,000 square meters. With the introduction of vacuum glass production capacity and the opening up of downstream application markets, it is expected to form a second growth curve.
Profit forecast and investment rating: The company is a provider of systematic solutions and a leading vacuum insulation board company in the field of vacuum insulation energy saving. It is deeply involved in major downstream customers, and continues to promote product and process iteration, layout and cultivation of new products, vacuum glass. We estimate that the company's net profit for 2023-2025 will be 106 million yuan (quick performance report), 165 million yuan, and 234 million yuan, respectively. The closing price on March 25 corresponded to price-earnings ratios of 32 times, 21 times, and 15 times, respectively. Based on the good growth of Saite New Materials's main business and the development prospects of the new product vacuum glass, it maintained a “buy” rating.
Risk warning: the risk that raw fuel costs will rise more than expected, the penetration rate of vacuum insulation panels will not grow as expected, and the construction and application promotion of vacuum glass production lines will fall short of expectations.