\u3000\u30 Shenzhen Fountain Corporation(000005) 19 North Industries Group Red Arrow Co.Ltd(000519) )
Investment logic
Superhard materials have performed well, and the profitability has improved significantly in 21 years: the company is mainly engaged in special equipment, superhard materials, special vehicles and auto parts, and the first two contribute to the main income of the company. In the 21st year, the company's revenue was 7.5 billion yuan, + 16%, net profit was 485 million yuan, + 77%, and net interest rate was 6.46% (+ 2.2pct), of which superhard materials driven the rapid growth of performance. In the 21st year, the company's revenue was 2.4 billion yuan, + 25.2%, net profit was 657 million yuan, with a simultaneous increase of 60.2%, and net interest rate was 27.3% (+ 6pct).
Industrial production capacity transfer + rapid growth of downstream photovoltaic demand, and the price of industrial diamond continues to rise: the demand growth of photovoltaic industry + cultivation of drilling and expansion of production transfer capacity, industrial diamond is in short supply, and the price rise frequency is high / large. Since 21 years, the price has increased once a quarter on average, with an increase of 5% - 10% each time. The company announced that the annual sales volume of industrial diamond is 6 billion carats / Bain. According to the data, the market share is estimated to be 32%, ranking first in China and leading in the world.
HTHP technology is leading, actively expanding production and stabilizing its leading advantages: India's import and export data verify that the terminal demand for cultivated diamonds continues to boom. 1q22 India's imports of cultivated diamond blanks and exports of bare diamonds increased by 105.5% and 77% respectively. The company has advanced the military carat diamond jewelry market in 17 years, with strong technical force. It can supply more than 3 carats of high-quality cultivated diamonds in batches, and actively promote the expansion of production capacity. In 21 years, it added 200 + sets of equipment, and the annual output of 120000 carats of cultivated diamonds was completed and accepted in January 22 (160 sets of presses).
The development prospect of intelligent ammunition is broad, and the loss of automobile and parts is narrowed: with the deepening of practical military training, the demand for expendable equipment is expected to continue to grow. The company has a professional intelligent ammunition platform, the revenue side will grow steadily, and the net profit will be affected by investment. The loss will expand in 21 years and gradually narrow in the future. The product structure was optimized and new products were developed. The loss of automobiles and parts was turned into a profit of 2.43 million in 21 years, with a net interest rate of 0.34%.
Investment advice
The demand side continues to be strong and is optimistic about the prospect of accelerated penetration of cultivated diamonds + price rise of industrial diamonds. The company is a leader in superhard materials, with prominent scale advantages. The market share / number of presses / technical level / R & D capacity / financial strength are in the leading position in the industry. It is expected to benefit from the boom of drilling demand + the improvement of yield rate, which will bring about structural price rise + industrial drilling price rise, enhance performance flexibility and achieve rapid performance growth. At the same time, special equipment is expected to benefit from the steady growth of the expansion of the intelligent ammunition industry. The profit and loss of automobiles and parts has been balanced in the past 21 years, and the drag factors on performance have been gradually eliminated.
It is estimated that the EPS will be 0.5% in 22 ~ 24 years 72 / 1.03/1.33 yuan, the leader of superhard materials + Intelligent ammunition in China, giving a 22-year 34 times PE, corresponding to the target price of 24.54 yuan, and giving a "buy" rating for the first time.
Risk tips
The price of cultivated diamond fell / the demand was lower than expected, the improvement of military industry / automobile business was lower than expected, and the sales restriction was lifted.
