Incidents:

The company published its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 840 million yuan +32% year-on-year, and net profit of 110 million yuan +66% year-on-year. 2024Q1 achieved revenue of 220 million yuan +46% year over year, and net profit to mother of 0.3 billion yuan +152% year over year.

Comment:

2023Q4 performance continued to grow at a relatively rapid pace. 2023Q4 achieved revenue of 250 million yuan +39% year over year, and net profit to mother of 0.3 billion yuan +15% year over year.

Downstream demand is improving. In overseas markets, with the improvement of energy efficiency standards for refrigerators in developed countries and regions such as the European Union, the market volume of energy-efficient refrigerators increased. According to third-party data, sales of products with energy efficiency grade C or above in the EU refrigerator market all increased by more than 50% year-on-year from January to October 2023.

In terms of the domestic market, in 2023, the retail volume of China's refrigerator industry was 38.31 million units, up 1.5% year on year, retail sales were 133.3 billion yuan, up 7% year on year, and the average market price increased further.

Production and sales were strong in 2023. The company produced 9.17 million square meters of vacuum insulation panels +43% year over year, and sales volume of 8.82 million square meters +35% year over year.

Profit margins have rebounded. In 2023, we achieved gross sales margin of 33.0% yoy +6.4pct, net profit margin of 12.6% yoy +2.6pct; 2024Q1 gross sales margin of 34.6% yoy +4.8pct, net profit margin of 12.8% yoy +5.4pct.

Additional production capacity continues to be released. The company aims to complete the construction of a vacuum insulation board project with an annual output of 5 million square meters from 2024 to 2025, improving the company's ability to serve nearby customers and the overall production capacity scale.

The company's equipment is under construction and renovation in Liancheng and Feixi, and additional production capacity will be gradually released from March 2024.

Restricted stock incentives include targets for high performance growth. The target for the 2024 assessment year is based on 2021. The target value of revenue and net profit deducted for 2024 is a growth rate of not less than 100%, or 1.42 billion yuan and 196 million yuan; the trigger value is a revenue and net profit growth rate of not less than 80%, or 1.28 billion yuan and 176 million yuan.

Maintain an “Overweight” rating. According to actual performance fine-tuning profit forecasts, revenue from 2024 to 2026 is expected to be 12/17/2.2 billion yuan, +44%/25% year over year, and net profit to mother is 1.6/2.3/290 million yuan (2024/2025 forecast value was 17/240 million yuan), +47%/45%/29% year over year, corresponding PE is 24/16/13 times.

Risk warning: downstream demand falls short of expectations, raw fuel prices fluctuate, and the company's performance falls short of expectations