\u3000\u3000 Beijing Worldia Diamond Tools Co.Ltd(688028) (688028)
Event: the company announced that it plans to invest 330 million yuan to build the CVD cultivation diamond and diamond functional materials project. After the project is completed, it can achieve an annual output of 200000 carats of CVD cultivation diamond and diamond functional materials, and realize the production capacity of processing 110000 carats. After the project is fully completed, it is expected to achieve an operating revenue of 250 million yuan, a total profit of about 110 million yuan, and an investment profit margin of 27.9%.
Cultivating diamonds has strong environmental protection attributes, obvious cost performance advantages and strong demand. Cultivated diamonds have almost the same characteristics as natural diamonds. They can be comparable to natural diamonds in terms of crystal structure integrity, transparency, refractive index and dispersion. Moreover, cultivated diamonds have stronger personalized customization ability and more environment-friendly production process, while the price is only 1 / 3 of that of natural diamonds. They have prominent cost-effective advantages, which is more conducive to occupying the unmarried consumer market. With the increasing recognition of diamond cultivation, its demand is growing rapidly.
The gross profit margin of diamond cultivation is high. The company has mature diamond cultivation technology and strong performance contribution ability. Driven by strong demand, the gross profit margin of diamond rough production is as high as more than 60%, with strong profitability. The company uses chemical vapor deposition (CVD) to produce cultivated diamonds. The processing technology is mature and has high industrial standard process. After the construction of equipment and plant, the company can quickly realize the mass production of cultivated diamonds and has a strong contribution to the performance of cultivated diamonds.
The company is a leading enterprise of superhard cutting tools, expanding the business of cemented carbide and cermet CNC blades, expanding the product series, and plans to acquire xinjinquan to enhance the competitiveness of 3C industry. The company has strong competitiveness and influence in the field of superhard cutting tools, and plans to invest 210 million yuan to build a production capacity of 28 million coated cemented carbide and cermet CNC blades, so as to further improve the company’s cutting tool product series and meet the needs of customers; Meanwhile, the company plans to acquire xinjinquan, a leading cutting tool enterprise in 3C industry, which will further enhance the competitiveness of the company’s cutting tools in 3C industry.
Profit forecast and investment suggestions. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 75 million yuan, 120 million yuan and 188 million yuan respectively, and the compound growth rate of net profit attributable to the parent company in the next three years will be 56.1%. Considering the high growth of the company and the valuation level of comparable companies, the company will be given 35 times PE in 2022, the target price is 52.50 yuan, and maintain the “hold” rating.
Risk tips: economic downside risk, technology R & D failure risk, and the risk that the promotion of diamond cultivation is less than expected.
