\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Henan Liliang Diamond Co.Ltd(301071) : the purest target of superhard materials, which has precipitated industry rookies in the past decade
It is mainly engaged in the cultivation of diamonds, diamond single crystals and diamond micro powders. In 2021, the revenue is 500 million yuan (+ 104% YoY), and the net profit attributable to the parent company is 240 million yuan (+ 228% YoY). 1) Cultivating diamonds: the revenue increased from + 428% to 200 million yuan year-on-year, accounting for 40% and the gross profit margin was 81%; 2) Diamond single crystal: revenue + 38% year-on-year to 140 million yuan, accounting for 28% and gross profit margin 58%; 3) Diamond micro powder: the revenue increased from + 55% to 160 million yuan year-on-year, accounting for 31% of the revenue and 50% of the gross profit margin.
Cultivate diamonds in short supply + HTHP technology iteration, increase both volume and price, and boost profits, with a gross profit margin of 64% and a net profit margin of 48% in 21 years. From 2019 to 2021, the gross profit margin of the company was 44% / 43% / 64% and the net profit margin was 29% / 30 / 48%, respectively. In recent three years, the profitability has increased year by year, and the net profit margin of 21q4 single quarter reached the highest point in history of 51%.
Henan Liliang Diamond Co.Ltd(301071) : focus on cultivating the best diamond track, while technological innovation + capacity expansion are in progress
Highlight 1: actively introduce new forging large cavity press, expand production and look forward to the future. In 18-20 years, the diamond production capacity of the company doubled from 64000 carats to 141000 carats. In the future, the main catalysis: the number of six sided top presses will increase year by year: the number of six sided top presses will increase from 58 in 2012 to 483 at the end of June 2021 through in-depth cooperation with Sinomach Precision Industry Co.Ltd(002046) and other suppliers; Model focus new forging large cavity: it has been installed and put into operation at the end of 2020 φ 800、 φ 750 and φ 700 (large piston diameter and cavity) hexahedral press accounts for 91%, and the industry average is 19%. At present, it is in the stage of laboratory research and development φ The 800 new forging hexahedral press is expected to achieve the output level of 400500ct.
Highlight 2: the pricing mechanism anchors the natural drill, and the difference between supply and demand leads to the expectation of price rise. Bain data predicted that in 21 years, natural diamond rough increased by + 5% year-on-year to 120 million carats, and the peak level of 150 million carats before the epidemic has not been restored. The gap between diamond supply and demand will be fixed, and the gap between diamond supply and demand will be effectively supplemented.
Cultivating diamonds: a new and good track, with a compound growth rate of more than 120% and a production penetration rate of only 6%, the prosperity continues
From 17 to 19, the compound growth rate of global cultivated diamond production exceeded 120% to 7 million carats, and the production penetration rate was 6%. The demand burst and production expansion was limited. Leading enterprises will enjoy the double dividend of capacity release + price rise. Cultivated diamonds have the advantages of high quality and low price. The price is only 1-40% of that of natural diamonds of the same grade. The change of consumption concept accelerates and the penetration rate increases.
Industrial diamond: high-end manufacturing promotes the rise of demand, and the inclined extrusion of production capacity is expected to increase both volume and price
As an indispensable superhard material in the economic and national defense fields, the demand growth and capacity squeeze drive the average price to rise again. The hexahedral press is a general equipment for superhard materials, which can switch between diamond single crystal and cultivated diamond. The existing equipment in the market is more inclined to cultivate diamonds, the industrial diamond production capacity is squeezed, resulting in rising prices, and the profit is expected to increase again.
Profit forecast and valuation
It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 500 million, RMB 760 million and RMB 1.02 billion respectively, with a year-on-year increase of 110%, 51% and 35%, a compound growth rate of 62% in 21-24 years, and PE will be 32, 21 and 16 times respectively. It will be rated as "overweight" for the first time.
Risk tips
Changes in the competition pattern of diamond industry, risks of macroeconomic and market demand fluctuations, R & D risks, etc.
