\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
According to the product structure, the cultivation diamond business is the company's main source of revenue, and the revenue growth rate is the most significant. The company's main business can be divided into diamond finished products (cultivated diamonds), diamond micro powder, large single crystal diamond and others. Among them, diamond products are the company's main revenue generating business. From 2017 to 2021, the operating revenue of the company's diamond finished products business increased rapidly from 20 million yuan to 197 million yuan, with a CAGR of 77.16%; The proportion in the company's main revenue increased from 14.08% to 39.56%. Among them, the revenue growth of diamond products in 2021 was the most significant, up to 432.43%; The proportion of revenue exceeded that of diamond powder for the first time, becoming the category product with the largest proportion of revenue of the company. This is mainly due to the rapid growth of global diamond cultivation market demand in 2021, the substantial increase of diamond cultivation production capacity by Chinese mainstream production enterprises, and the company's active expansion of production capacity. Driven by the strong market demand in the downstream, the company's performance, especially the diamond cultivation sector, has achieved explosive growth.
The company's total operating income and net profit attributable to the parent company showed an overall growth trend. From 2017 to 2021, the company's total operating revenue increased year by year from 142 million yuan to 498 million yuan, with a CAGR of 36.85%; Among them, the year-on-year growth rate of the company's total revenue in 2021 was the most significant, up to 103.50%. In terms of net profit attributable to the parent company, from 2017 to 2020, the net profit attributable to the parent company increased from 42 million yuan to 240 million yuan, with a CAGR of 54.61%; Among them, the year-on-year growth rate of the company's net profit attributable to the parent company in 2021 was the most significant, up to 228.17%.
In recent years, the market penetration rate of cultivated diamonds in the world has increased rapidly. In the context of reduced supply of natural diamonds and unabated demand for diamond jewelry consumption, as a substitute for natural diamonds, the penetration rate of cultivated diamonds has increased rapidly. From 2018 to 2020, the global output of cultivated diamonds increased from 1.44 million carats to 7.20 million carats, and the CAGR reached 123.61%. In 2020, the global market penetration of cultivated diamonds will reach 6.30%. Looking forward to the future, the scale of the global diamond raw stone market is increasing year by year.
China is the world's largest diamond producer. According to the data of China economic intelligence network, in 2020, the total output of cultivated diamond rough in the world will reach 7.2 million carats; Among them, the output of cultivated diamond blanks in China is 3 million carats, accounting for the largest proportion of the total output of cultivated diamond blanks in the world, reaching 42%; The output of rubble in India and the United States is 1.5 million carats and 1 million carats respectively, accounting for 35% in total; The output of rubble in other areas is 1.7 million carats, accounting for 24%. It can be seen that by 2020, China has become the world's largest producer of cultivated diamonds, occupying the largest market share in the upstream core profit link.
The company has obvious competitive advantages in product structure / technology R & D / synthetic equipment and production efficiency / profitability. First of all, the company has rich product structure and obvious synergy, which can quickly respond to market demand. In terms of technology R & D, the company has not only built a perfect core technology system, but also continuously increased its investment in R & D. from 2017 to 2021, the company's R & D expenses increased from 06 million yuan to 27 million yuan year by year, the CAGR reached 45.65%, and the R & D expense rate increased slightly from 4.23% to 5.42%. In terms of production capacity, the company has advanced synthetic equipment, high production efficiency and positive expansion of production. From 2012 to 2021h1, the installed capacity of the company's six sided top press increased from 58 to 483. With the increase of production equipment investment, the overall capacity of the company's main products also showed an increasing trend. In March 2022, the company also raised a total amount of no more than 4 billion yuan from specific objects, which is mainly used for the construction of phase II diamond and diamond Cultivation & Shangqiu Henan Liliang Diamond Co.Ltd(301071) science and technology center and diamond cultivation intelligent chemical plant, so as to speed up the construction of new plant areas and expand the scale of production capacity. In terms of profitability, the gross profit margin and net profit margin of the company are significantly higher than those of comparable companies in the same industry.
Investment suggestion: the company is a major man-made diamond manufacturer in China. At present, it has formed three core product systems: diamond single crystal, diamond micro powder and diamond cultivation. Among them, the diamond cultivation business is rising and actively expanding production. At the same time, the company has significant advantages in product structure / technology R & D / integration equipment and production efficiency / profitability, and its performance has achieved explosive growth. From the perspective of the industry, in recent years, under the background of the reduction of the global supply of natural diamonds and the unabated demand for diamond jewelry, the penetration rate of global diamond cultivation has increased rapidly, and the future development space of the industry is huge. China is the world's largest producer of cultivated diamonds, mainly using HPHT production method. At present, China has become a mature enterprise in the upstream core profit link of cultivated diamonds, and the upstream competition pattern is relatively stable. Looking forward to the future, we are optimistic about the development of China's diamond upstream enterprises. In addition, industrial diamond has a wide range of applications, the demand is growing steadily, and the industrial diamond industry is improving. The company's strategic positioning is clear and its future growth can be expected. It is estimated that the company's earnings per share from 2022 to 2023 will be 8.12 yuan and 12.28 yuan respectively, and the current share price corresponding to PE will be 37.31 times and 24.69 times respectively, maintaining the "recommended" rating of the company.
Risk warning: market competition risk; Technology renewal risk; The risk that the raised investment project cannot achieve the expected benefits; The risk of brain drain or shortage; Financial financing risks; Risk of product market price decline; Risk of technical disclosure; Risk of large inventory; Foreign exchange rate fluctuation risk, etc.
