Henan Liliang Diamond Co.Ltd(301071) (301071)
1、 Events
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be 232 million yuan – 245 million yuan in 2021, with a year-on-year increase of 217.14% – 234.95%, and the basic earnings per share will reach 4.72 yuan / share – 4.98 yuan / share. In 2021, the impact of non recurring profits and losses on the net profit attributable to shareholders of the listed company is expected to be about 8.5 million yuan – 9.5 million yuan. The company’s 2021 performance forecast exceeded expectations.
2、 Comments
In Q4, the net profit attributable to the parent company increased by 138% – 182% in the same quarter, and the performance increased quarter by quarter driven by technology R & D and capacity expansion. In a single quarter, the company’s Q4 net profit attributable to the parent company is expected to be 70.4325 million yuan – 83.4325 million yuan, with an increase of 138% – 182% at the same time. The growth rates of net profit attributable to parent companies of 21h1 and 21q3 were 327% and 194% respectively. The company’s performance continued to grow over the same period of last year, mainly due to: ① breakthroughs in technology research and development, a large increase in the proportion of sales of cultivated diamond products and a significant improvement in benefits; ② Raised investment projects have been put into operation one after another, and the production capacity of cultivating diamonds and diamond single crystals has increased steadily; ③ The supply of diamond single crystal market is tight and the sales price has increased significantly.
The prosperity of cultivating diamonds continues unabated, and the company’s production capacity is expected to continue to break through in early 22. According to GJEPC data, India’s diamond import and export situation in October 21, and the bare diamond export data of the same period last year were revised. The original value was 147 million US dollars, and the revised value was 81 million US dollars. After updating, the year-on-year growth rate was 80.6%, and the demand for cultivated diamonds continued to increase. We expect that the number of presses that have been installed, commissioned and stably produced by the company is about 300, and the number of presses that can be stably produced by the company is expected to continue to break through in the first quarter of 22.
3、 Profit forecast and valuation
The company’s brand has high recognition, perfect product structure and strong R & D strength, and is in an advantageous position in the superhard material industry. With the gradual rise of diamond cultivation, the company is expected to fully enjoy the dividend of diamond cultivation industry and maintain a long-term leading position in the industry by virtue of technological progress and capacity expansion. We expect that the net profit attributable to the parent company from 2021 to 2023 will be RMB 240 / 4.5 / 650 million respectively (the previous value is RMB 210 / 4.0 / 530 million), and the corresponding PE will be 75X / 40x / 27x respectively, maintaining the buy rating.
Risk tips: the risk of macroeconomic and market demand fluctuation, the risk of intensified market competition, the risk of continuous R & D and innovation, the risk of loss of core technicians and performance forecast are the preliminary calculation results, and the annual report data shall prevail
