\u3000\u30 Shenzhen Fountain Corporation(000005) 19 North Industries Group Red Arrow Co.Ltd(000519) )
The company issued 2021 performance express and 22q1 performance forecast
In 2021, the company achieved an operating revenue of 7.514 billion yuan, a year-on-year increase of 16.26%; The net profit attributable to the parent company was 472 million yuan, a year-on-year increase of 71.93%. In 2022q1, the company expects to realize a net profit attributable to the parent company of 240280 million yuan, with a year-on-year increase of 148.14% – 189.50%. The substantial growth of the company’s performance is mainly due to the hot demand for cultivated diamonds and industrial diamonds and the significant year-on-year increase in sales prices.
Central South Diamond: cultivate diamond in the world as the leader of industrial diamond, expand production and consolidate production advantages
The main products of the subsidiary Zhongnan diamond include diamond, cubic boron nitride and cultivated diamond, with the market share ranking first in the world. The annual sales volume of diamond exceeds 6 billion carats; Colorless cultivated diamond products were successfully trial produced in 2016, and can batch stabilize the production of 20-30 carat cultivated diamond blanks. At present, the company has about 4000 six sided top presses in operation, and gradually uses 850 / 900 and other large chamber presses to replace 650 presses. The company’s “120000 carat diamond cultivation project” and “high-grade industrial diamond and gem diamond series construction project of Zhongnan diamond Co., Ltd.” have been successively selected into the “982” short board project of Henan Province in 2020 and 2022. The expansion of production has been strongly supported by the local government, and the performance growth is expected.
Special equipment: China takes the lead and its performance is expected to continue to improve
The company is an intelligent ammunition listing platform under China ordnance industry group. It has the R & D and mass production capacity of many national key models of products, can meet the production requirements of different products, and is at the advanced level in China. The company has sufficient military business orders. With the improvement and update of military procurement pricing mechanism, the performance is expected to continue to improve.
Investment suggestion: the company’s main products are in short supply, the overweight production capacity enjoys the dividend of the rising period of the industry, and the performance is expected to continue to grow. It is expected that the company will realize the net profit attributable to the parent company of RMB 472 / 992 / 1349 million from 2021 to 2023, corresponding to the current PE valuation of 66x / 32x / 23x respectively, giving a “buy” rating.
Risk tip: the downstream demand of cultivation drilling is less than expected, the industry competition is intensified, and the order of special equipment fluctuates.
