\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Event: the company released its 2021 annual report. In 2021, it achieved a revenue of 498 million yuan, a year-on-year increase of 103.5%; The net profit attributable to the parent company was 240 million yuan, a year-on-year increase of 228.17%. Among them, Q4 achieved a revenue of 154 million yuan in a single quarter and a net profit attributable to the parent company of 78.49 million yuan.
The company also issued the 2021 profit distribution plan, which plans to distribute cash dividends of 10 yuan (including tax) for every 10 shares to all shareholders, and plans to increase 10 shares for every 10 shares to all shareholders with capital reserve. Cultivate diamond business, actively expand production capacity, and significantly increase gross profit margin. The production technology of cultivation diamond industry is becoming more and more mature. With the recognition of cultivation diamond by diamond appraisal institutions and terminal brands, the industry is rising rapidly. The company seized the opportunity to actively expand production capacity. In 21 years, new plant equipment was put into operation successively. Thanks to the release of new production capacity, in 21 years, the company cultivated diamond business and achieved revenue of 197 million yuan, a year-on-year high-speed growth of 428%. In terms of profitability, the gross profit margin of diamond cultivated by the company in 21 years was 81.38%, significantly increased by 14.55 PCT compared with 20 years, which is (1) the supply of diamond industry is tight and the price environment is good; (2) The company has made technological progress and improved the rate of high-quality products. At present, the company has mass produced 2-10 carat large particle high-grade cultivation diamonds, and has successfully entered the list of qualified suppliers of many diamond jewelry production and processing enterprises outside China, which is expected to continue to maintain good growth.
The price of industrial diamond market has increased, and the income has also increased rapidly. In the past 21 years, the company’s revenue from diamond micro powder was 156 million yuan, with a year-on-year increase of 55%. The revenue from large single crystal diamond was 137 million yuan, with a year-on-year increase of 38%. It also achieved rapid growth, thanks to two factors: (1) the demand for industrial diamond in downstream photovoltaic, consumer electronics and other fields increased; (2) Mainstream diamond enterprises give priority to expanding production and cultivating diamond presses. The growth of industrial diamond production capacity is slow, which makes the price of industrial diamond single crystal rise significantly.
Profit forecast and investment suggestions: it is estimated that the operating revenue of the company from 2022 to 2024 will be 937 million yuan, 1467 million yuan and 2.045 billion yuan respectively, and the net profit attributable to the parent company will be 488 million yuan, 744 million yuan and 1.026 billion yuan respectively, with corresponding EPS of 8.09 yuan, 12.32 yuan and 17.00 yuan respectively, maintaining the “buy” rating.
Risk tip: the price of industrial diamond fluctuates, and the competition in the diamond industry deteriorates.
