DEVOTION(SZ:300335)2022-12-04 07:02Company Overview - Founded in 1993, focusing on the R&D, production, and sales of heating equipment, particularly fuel and gas boilers [2] - Entered the biomass energy sector in 2008 and became a leader in biomass heating [2] - Shifted to the clean energy sector in 2015, acquiring Century New Energy and Disen Home to expand into distributed natural gas energy [2] Business Model - Positioned as a "clean energy comprehensive service provider," offering heating, cooling, and electricity services to industrial and commercial users (B-end) [3] - Provides gas boiler equipment and home comfort solutions through the "Little Squirrel" gas wall-hung boiler for residential users (C-end) [3] Market Context - Increasing environmental pollution and government policies promoting "coal-to-gas" initiatives are driving demand for natural gas [3] - The government aims to increase natural gas consumption to 10% by 2020 and 15% by 2030 [3] - Significant growth in orders for wall-hung boilers and gas boilers is expected due to these policies [4] Production Capacity - The "Little Squirrel" wall-hung boiler has a production capacity of 900,000 units per year, with plans to expand to approximately 1.4 million units by adding two fully automated production lines [4] Sales Performance - In 2016, wall-hung boiler sales reached 138,000 units with a gross margin of about 40% [8] - In the first three quarters of 2017, wall-hung boiler orders surged by 428% year-on-year, with over 400,000 units ordered [8] - The company anticipates wall-hung boiler sales to reach around 5 million units in 2018 due to favorable policies [8] Market Expansion - The wall-hung boiler market is expanding from urban areas to suburban and rural regions, driven by clean heating policies [8] - The company is actively increasing its presence in northern regions affected by "coal-to-gas" policies [9] Financial Impact - The rise in raw material prices has some impact on product pricing, but the company plans to mitigate costs through various strategies [15] - The company operates on a non-capital advance basis to reduce payment risks [10] Future Outlook - The next decade is seen as a golden period for the natural gas industry, with significant growth expected in B-end business orders [3] - The company is focusing on expanding its market share in southern regions where natural gas infrastructure is improving [14]