\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Event: the company released the performance forecast for the first quarter of 2022. During the reporting period, the net profit attributable to the parent company was 93 million yuan to 103 million yuan, with a year-on-year increase of 127.89% - 152.4%, and the deduction of non net profit was 90 million yuan to 100 million yuan, with a year-on-year increase of 128.71% - 154.12%.
Raised investment projects have been put into operation one after another, and the continuous improvement of income structure has driven the improvement of overall profitability. The company started the construction of new plant area at the beginning of 2021 and gradually put it into stable operation. The proportion of diamond sales of the company's high gross profit products has increased, the price of industrial diamond products has continued to rise, and the overall profitability has been continuously enhanced. In 2022, the company will focus on completing the construction of the new plant, ensure the full completion of Baojing raised investment project, the rapid production of phase II construction project, and rapidly expand the scale of production capacity, so as to meet the future market demand for diamond cultivation. In addition, the company will speed up the construction of R & D center, introduce high-quality talents, improve relevant technology and maintain the company's technical advantage in the field of synthetic diamond. Increase the layout of fixed size and cultivate diamond production capacity. Previously, the company issued the plan for issuing A-Shares to specific objects in 2022, which plans to raise a total of no more than 4 billion yuan, including about 3.01 billion yuan for equipment purchase, and it is expected to purchase about 2000 presses. The smooth implementation of fixed value-added projects is conducive to the release of medium and long-term performance flexibility.
Terminal brands help promote consumer awareness, support and cultivate the prosperity of the diamond industry. Jewelry brands have successively launched the layout for cultivating diamonds, and there is enough room for the growth of market demand in China: Zhou Shengsheng disclosed the establishment of "Shidai e-commerce (Guangzhou) Co., Ltd." in his 2021 annual report to actively layout the diamond industry Mclon Jewellery Co.Ltd(300945) was officially launched in March 2021 to cultivate the diamond brand "mucan".
Investment suggestion: the company actively expands production and increases R & D investment to enhance and consolidate its competitive advantage. Therefore, we expect the company's EPS in 22 ~ 24 years to be 7.39 yuan, 11.41 yuan and 15.26 yuan / share respectively. Considering the steady expansion of the company's production and the close cooperation between upstream and downstream, the "overweight" rating is maintained.
Risk warning: raw material price fluctuation risk; The downstream demand for diamond cultivation is less than expected; CVD development exceeded expectations; Diamond giants suppress
