\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Event:
The company released its annual report for 2021. During the reporting period, the company achieved a revenue of 498 million yuan, a year-on-year increase of 103.50%; The net profit attributable to the parent company was 240 million yuan, a year-on-year increase of 228.17%, close to the upper limit of performance forecast; At the same time, the company plans to pay 10 dividends on 10 shares and increase 10 shares.
Key points of the report:
High growth of core business and outstanding performance under “cost reduction and efficiency increase”
Due to the continuous improvement of downstream demand, the continuous improvement of product structure and other factors, the performance of the company achieved rapid growth in 2021, and the revenue of 21h1 / 21q3 / 21q4 was 218 / 126 / 154 million yuan respectively, with a year-on-year increase of 125.38% / 81.13% / 96.33%; The net profit attributable to the parent company was 108 / 53 / 78 million yuan; A year-on-year increase of 326.51% / 193.72% / 165.10%. In terms of products, the company’s diamond cultivation business performed strongly, with a year-on-year increase of 428.11% over 20 years; At the same time, the rapid rise of product prices, the decline of costs under technological progress and the marginal rise of downstream demand also drive the marginal increase of gross profit margin. The comprehensive gross profit margin in 21 years is 64.07% (+ 20.48pct). The gross profit margin of cultivated diamond / diamond micro powder / large single crystal diamond is 81.38% (+ 14.56pct) / 50.02% (+ 9.66pct) / 57.93% (+ 18.49pct) respectively. In terms of expense rate, the company’s expense rate during the period decreased by 0.21pct to 10.00%, of which the sales expense rate decreased by 0.80pct to 1.12%, and the R & D expense rate increased significantly to 5.33% (+ 1.26pct).
Cultivate diamond industry leaders, and “advanced technology system + continuous release of production capacity” can be expected in the future
The company has been deeply engaged in the artificial diamond industry for more than ten years, gradually forming an industrial pattern focusing on the cultivation of diamonds, diamond single crystals and diamond micro powders, and has become a leader in the cultivation of diamonds industry. At the technical level, the company has long been committed to the improvement of large particle cultivation diamond synthesis technology, and has realized the mass production of 2-10 carat large particle high-grade cultivation diamond blanks. At the capacity level, the company’s raised investment capacity has begun to be released. It is expected that with the full completion of Baojing raised investment project and the rapid production of phase II construction project, the company’s capacity scale will continue to expand. In the medium and long term, the company is expected to enter the golden development period with the accelerated penetration of the cultivation diamond market and the continuous improvement of consumers’ demand for “happy consumption”.
Investment advice and profit forecast
It is estimated that the revenue of Henan Liliang Diamond Co.Ltd(301071) 2022-2024 will be 859 million yuan / 1.245 billion yuan / 1.653 billion yuan respectively, with a year-on-year increase of 72% / 45% / 33%, and the net profit attributable to the parent company will be 407 million yuan / 584 million yuan / 776 million yuan respectively, with a year-on-year increase of 70% / 43% / 33%. At present, the corresponding EPS of the total share capital and stock price are 6.74/9.67/12.85 yuan and pe42 / 30 / 22x respectively, maintaining the “buy” rating.
Risk tips
Downstream demand is lower than expected, market competition intensifies, and the marginal production cost rises.
