\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) Beijing Zznode Technologies Co.Ltd(003007) 00)
Events
Changsha Dialine New Material Sci.&Tech.Co.Ltd(300700) released the first quarterly report of 2022. In 2022q1, the company realized an operating revenue of 122 million yuan, an increase of 175.8% at the same time; The net profit attributable to the parent company was 14 million yuan, reversing losses year-on-year; Deduct the net profit not attributable to the parent company of 14 million yuan, reversing the loss year-on-year. At the same time, it was announced that the company added 24 million km / year of diamond line capacity, with a total capacity of 36 million km.
Key investment points
The performance is in line with expectations and the profitability is gradually improved
The company’s 2022q1 performance improved significantly month on month, with the sales gross profit margin increased by 17pcts to 28% month on month, and the net profit margin was 10.88%. The profit turned from loss to profit, which was mainly due to the company’s increasing investment in technology and carrying out technical transformation (technical transformation of 8-wire machine to 15 wire machine), resulting in the rapid and large volume of diamond thread business.
Photovoltaic demand exceeded expectations and further expanded production to improve production capacity
Since 2022, affected by the European energy crisis and the rush to install in India, the downstream demand of photovoltaic has exceeded expectations, and most enterprises in Vajra line industry have maintained a high operating rate since the beginning of the year. Since this year, the company’s monthly production has basically reached full capacity. At present, the company’s production capacity is about 1 million km / month, which is small compared with the overall demand of the industry. Under the condition that the new plant is ready for use, the company plans to increase the production capacity of diamond line by 24 million km / A. after this expansion, the total production capacity of the company will reach 36 million km / A. The estimated investment amount of the company is about 150 million yuan. We expect that if the expansion is successful, the market share of the company is expected to increase.
Supporting products of photovoltaic industry are expected to gradually contribute profits
In addition to sapphire, magnetic materials, silicon square and diamond wire for slicing, the company is also further expanding the application fields of wide diamond wire products, such as the upgrading of processing methods in traditional fields such as graphite and stone. The research and development of other new products of the company also began to achieve results gradually, and some products have begun to realize large-scale sales, such as grinding and polishing materials and tungsten wire rope, which is expected to bring new growth space to the company.
Profit forecast
We predict that the company’s revenue from 2022 to 2024 will be RMB 670 million, RMB 1.20 billion and RMB 1.64 billion respectively, and its EPS will be RMB 0.73, RMB 1.42 and RMB 2.01 respectively. The corresponding PE of the current stock price will be 22, 12 and 8 times respectively, giving the “recommended” investment rating.
Risk tips
Photovoltaic installation failed to meet expectations, diamond line expansion failed to meet expectations, diamond line prices fell, bulk commodity prices rose, etc
