Description of the event

The company released its 2024 three-quarter report. The company achieved total revenue of 0.668 billion yuan, a year-on-year increase of 12.94%, and net profit to mother of 65.1441 million, a year-on-year decrease of 17.74%. In a single quarter, revenue for Q3 2024 was 0.216 billion yuan, down 9.16% year over year. ; Net profit to mother was 10.9805 million yuan, a year-on-year decrease of 70.85%.

Incident comments

Revenue performance in the single quarter was relatively stable. The revenue of 2024Q1, 2024Q2, and 2024Q3 companies was 0.223, 0.229, and 0.216 billion yuan, respectively. The year-on-year growth rates were 46%, 14%, and -9%, respectively. The main reason was that 24Q1 had a high year-on-year growth rate during the same period. Q2 and Q3 had both growth rates as the base increased, but the year-on-year decline in 24Q3 revenue reflected terminal demand or slight weakness. On a month-on-month basis, 24Q3's revenue fell 5.6% month-on-month. Based on this, we determine that 24Q3's VIP board sales may also have declined slightly month-on-month.

Looking at single-quarter results, 24Q1, 24Q2, and 24Q3 were 0.029, 0.025, and 0.011 billion yuan respectively. The single-quarter results declined month-on-month. In addition to the sales volume factor, the company's product gross margin declined to a certain extent.

The production capacity of the main business is gradually climbing. VIP is the company's traditional main business, and there will be some production capacity bottlenecks in 2023. Currently, the company's new production capacity is gradually climbing. Weiaiji's “vacuum glass construction project with an annual output of 2 million square meters” was capped in the first half of 2024, and the original vacuum glass production test line was also moved from the Liancheng headquarters to the Xiamen factory area. At the same time, the company's VIP production capacity is also gradually climbing, and costs are optimized through internal capacity optimization. In the medium term, it is expected that the yield of vacuum glass products will increase and the release volume will bring a new growth curve to the company.

The market is being actively developed, and customer coverage is gradually expanding. The company's product export orientation holds. In the past, well-known downstream customers served by the company included international customers such as Samsung, LG, Toshiba Home Appliances, Hitachi, Whirlpool, Bosch Home Appliances, and ArchiRick; domestic customers include well-known brand home appliance manufacturers such as Haier, Midea, Hisense, and Miling. In addition, the company also sells some products to medical research or transportation insulation equipment manufacturers such as Thermo Fisher and Haier Biomedical in the US, as well as logistics companies such as SF Express. With the reputation and comprehensive quality advantages accumulated in the past, the company is now gradually expanding its customer base, providing new growth points for the company's operations.

Multiple categories have been developed, and cost and process advantages continue to expand. The company's processes continue to improve. At the same time, the company continues to promote the development of new products such as shell-shaped four-side sealing VIP, construction VIP, metal VIP, lightweight VIP, and ultra-thin VIP, as well as the automated transformation of existing processes. In the future, it is expected to further widen the competitive differences with small enterprises in terms of technology, quality and cost, and achieve another market penetration and expansion.

Medium-term strategic outlook: 1. On the VIP side of the main business, the market boom under the European bid upgrade is still sustainable, and it is expected to usher in new breakthroughs in the Japanese and South Korean markets. As far as the company is concerned, the construction of the new base in Anhui is going well, and the gradual release of production capacity is expected to contribute to a significant increase in the company's performance 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. Vacuum glass business: Currently, the company is still progressing steadily, and it is expected to gradually achieve the second growth curve performance in 2025.

The expected 2024-2025 results are 0.11 and 0.16 billion yuan, corresponding PE is 22 or 15 times, and the purchase rating.

Risk warning

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