\u3000\u30 Shenzhen Fountain Corporation(000005) 19 North Industries Group Red Arrow Co.Ltd(000519) )
Core view
22q1 is expected to realize a net profit attributable to the parent company of 240280 million yuan, a year-on-year increase of + 148% - 190%. The company released the performance express of 2021 and the performance forecast of the first quarter of 2022. It is expected to achieve a revenue of 7.514 billion yuan in 2021, 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%; 22q1 is expected to realize a net profit attributable to the parent company of 240280 million yuan, with a year-on-year increase of + 148% - 190%. The high performance increase is mainly due to superhard material products: the overall market demand remains strong, and the sales price increases significantly compared with the same period last year.
Cultivate continuous verification of the prosperity of the diamond industry. In terms of the performance of upstream manufacturers, at present, the three major diamond rough manufacturers in China have disclosed their performance in 2021, which has increased significantly year-on-year. Among them, Henan Liliang Diamond Co.Ltd(301071) 2021 achieved revenue / net profit attributable to parent company of RMB 498 million / 240 million respectively, with a year-on-year increase of + 103.50% / + 228.17%; The gross profit margin / net profit margin were 64.07% / 48.07% respectively, with a year-on-year increase of + 20.48/18.26 PCT. 22q1 is expected to realize a net profit attributable to the parent company of 93-103 million yuan, a year-on-year increase of + 127.89% - 152.40% Henan Huanghe Whirlwind Co.Ltd(600172) 2021 is expected to achieve a net profit attributable to the parent company of 41 million yuan, turning losses into profits significantly year-on-year. In terms of midstream data, GJEPC data shows that India's imports of cultivated diamond blanks in 19-21 years were US $263 / 4.40 / 1.130 billion respectively, and CAGR was 107.10%; The export volume of cultivated diamond bare diamonds was 381 / 529 / 1144 million US dollars respectively, and the CAGR was 73.24%. From January to February in 2022, the rough drilling volume / bare drilling export volume were US $308 million / 248 million respectively, with a year-on-year increase of + 81.38% / + 89.08%, and the permeability increased to 9.41% / 6.16%. At the retail end, major jewelry brands accelerated their entry. After 21 years of Pandora / Chanel / Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) / Mclon Jewellery Co.Ltd(300945) layout and Chow Tai Fook's water test, another Chinese jewelry giant Zhou Shengsheng has actively arranged and cultivated diamond business. The steady improvement of recognition outside China has driven the demand to continue to improve.
The company focuses on the market, steadily expands production and seizes development opportunities. Under the high prosperity of the industry, the company focuses on the market and steadily expands its production capacity. In January 2022, the 120000 carat production line project of cultivating diamond phase I was completed and put into operation; In February 2022, Henan Provincial Development and Reform Commission issued the implementation plan for the "982" project to make up for deficiencies in 2022. Among them, the total investment of the series construction project of high-grade industrial diamonds and gem diamonds in Central South diamond is 1.15 billion yuan. It is planned to complete the investment of 500 million yuan in 2022, and the production capacity will be further improved after the project is implemented. On the basis of ensuring the reasonable growth of quantity and the steady improvement of quality, the company strives to achieve better structure, better efficiency, higher quality and more sustainable development, and the overall operating efficiency continues to improve.
Risk warning: industry competition intensifies; Capacity expansion is less than expected; Downstream demand was lower than expected.
Investment suggestion: the diamond industry is still in the early stage of development, and the downstream demand is growing rapidly; Under the improvement of traditional diamond single crystal pattern, the price has risen for many times. As a leader in the superhard material industry, the company is in the leading position in the industry in terms of market position, product quality and production capacity. It will fully benefit from the high outbreak of the industry and its performance is expected to continue to be realized. We slightly raised the net profit of 202224 to RMB 1.175/1.526/1.779 billion respectively (the previous value was 9.98/14.48 in 22-23 years), and the corresponding PE value was 26 / 20 / 17 times, maintaining the "buy" rating.
