\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. In 2022q1, the company expects to realize a net profit attributable to the parent company of 93-103 million yuan, an increase of 128% – 152% at the same time; It is expected to realize a net profit of RMB 90 million to RMB 100 million, an increase of 129% – 154% at the same time. At the same time, the company recently issued a fixed increase plan, which plans to issue shares to no more than 35 issuing objects, with a number of no more than 120744 million shares (accounting for 20% of the total share capital before issuance), and the total amount of fund-raising is no more than 4 billion yuan, which is mainly used to cultivate new diamond production capacity construction and technology research and development.
The company’s profit side performance continued to improve, the proportion of diamond cultivation business increased significantly, and the demand for industrial diamond industry was strong. 22q1’s net profit attributable to its parent company continued to expand month on month, mainly due to 1) the significant increase in the sales proportion of the company’s high gross profit product cultivation diamond business, the strong market demand and tight supply of industrial diamond products, and the price increased significantly compared with the same period last year; 2) Raised investment projects have been put into operation one after another, and the output has increased rapidly. With the gradual formation of the consensus on the cultivation diamond market, the market demand has increased rapidly. In addition, due to the significant increase in the production capacity of cultivation diamond by China’s mainstream production enterprises, the supply of industrial diamond single crystal market is tight, and the sales price has increased significantly.
In terms of fixed growth, on the one hand, this fund-raising will accelerate the expansion of production capacity and on the other hand, strengthen R & D. after the project is put into operation, the company’s voice in cultivating the diamond market is expected to be significantly improved. Of which, 2.06 billion yuan is used to cultivate the capacity construction of diamond intelligent factory, of which 1.64 billion yuan is the same as equipment purchase; 1.6 billion yuan is used for power phase II industrial drilling and cultivating drilling intelligent factory, of which the equipment purchase cost is 1.37 billion yuan; 130 million yuan for the construction of R & D center; 210 million yuan was used to supplement working capital. In terms of production expansion progress, in general, the company’s fixed increase for equipment purchase is 3 billion yuan. After the fixed increase project is put into operation, the company’s voice in cultivating the diamond market is expected to be significantly improved.
Technological R & D breakthrough + continuous expansion of production capacity help the company gradually enhance its core competitiveness. 1) The R & D end of the company has independent intellectual property rights in the key technologies and process control of synthetic diamond production, and has mastered a full set of core technologies of synthetic diamond production, including raw material formula technology. The company’s technology has gradually broken through, the rate of high-quality products and the proportion of large particles have gradually increased, and the production efficiency and cost advantages are prominent. 2) As a leader in cultivating diamonds, the company will focus on completing the construction of new plant areas in 2022 to ensure the full completion of Baojing raised investment project, the rapid production of phase II construction project and the rapid expansion of production capacity. We expect that the number of presses is expected to exceed 1000 by the end of 22, helping the accelerated growth of performance.
Investment suggestion: the company has perfect product structure and strong R & D strength. It is expected to fully enjoy the dividends of cultivating diamond industry and maintain a long-term leading position in the industry by virtue of technological progress and capacity expansion. The company’s performance in 21 years is 240 million yuan, an increase of 228% at the same time. We adjusted the company’s forecast of net profit attributable to parent company in 22 / 23 years to 460 / 730 million yuan (the previous value is 450 / 650 million yuan), and the corresponding PE is 36x / 23x respectively, maintaining the “buy” rating.
Risk warning: market competition risk; Technology renewal risk; The risk that the raised investment project cannot achieve the expected benefits; Risk of product market price decline; The performance forecast data has not been audited, and the specific financial data shall be subject to the first quarterly report
