\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Key investment points
The company disclosed the performance forecast for the first quarter. The net profit attributable to the parent company in Q1 was 93-103 million yuan, yoy + 127.89% – 152.4%, mom + 18% – 31%; Deduct the net profit not attributable to the parent company of RMB 90-100 million, yoy + 128.71% – 154.12% and + 24% – 38% month on month.
Reasons for high performance growth:
① the production capacity at the income side expanded and the output increased rapidly. In 2021, the raised investment project was put into operation, and the performance began to be released in 2022. At the same time, the production capacity of phase II continued to expand.
② profit side structure optimization and price increase. The proportion of Q1 company’s cultivation diamond business was further increased, and the cultivation diamond with high gross profit optimized the company’s product structure. At the same time, the price of industrial diamond increased significantly due to strong demand (new fields such as photovoltaic and new energy) and tight supply (transfer of production capacity to cultivation diamond).
Comments on the fixed increase of the company: expand production, break through the bottleneck and consolidate the advantages after putting into operation.
On the evening of March 25, the company issued a fixed increase plan, and the total amount of funds raised is no more than 4 billion yuan, which is mainly used for the construction project of phase II diamond and cultivating diamond intelligent chemical plant, Shangqiu Henan Liliang Diamond Co.Ltd(301071) science and technology center and cultivating diamond intelligent factory. The construction period of the project is 3 years, of which the equipment purchase cost is about 3 billion. If the equipment purchase cost of six face top press accounts for about 90% and the equipment unit price is about 1.5 million, about 1800 equipment will be expanded. If the fixed increase and expansion project is successfully implemented, the company will significantly strengthen its position in the industrial chain and is expected to give priority to the industry expansion dividend in the future.
Investment suggestion: buy rating
At present, the company has low penetration and high growth. Henan Liliang Diamond Co.Ltd(301071) focuses on its main business and is expected to enjoy a valuation premium. It is predicted that the company’s net profit attributable to its parent company from 2022 to 2024 will be 447 million yuan, 693 million yuan and 912 million yuan, with a year-on-year increase of + 87%, + 55% and 32%, corresponding to pe36 / 23 / 18x from 2022 to 2024, maintaining the “buy” rating.
Risk warning: the risk of industry demand falling short of expectations, deviation in the calculation of industry total volume, industry price falling beyond expectations, capacity expansion falling short of expectations, and untimely update of information used in the research report
