\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
2022q1 performance continued to grow at a high speed and continued to maintain the “buy” rating
The company’s revenue in 2022q1 was 192 million yuan, with a year-on-year increase of 126.88%, and the net profit attributable to the parent company was 101 million yuan, with a year-on-year increase of 147.81%. The net profit reached the center of the forecast range of 127.89% – 152.40%, which was in line with expectations, mainly due to the simultaneous rise in the volume and price of cultivated diamonds and industrial diamond products. At present, the cultivation diamond and industrial diamond industry is still in a high boom stage. According to GJEPC, in March 2022, the import of cultivation diamond blanks in India increased by 157% year-on-year, the penetration rate was 9.1%, and the chain was increased by 2.1pct; The year-on-year growth rate of exports was 59%, and the penetration rate was 5.9%, which was basically the same month on month. The company is enjoying the industry β At the same time, it has the advantages of rapid production expansion and process improvement α Property, we maintain the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 4.4/6.6/950 million, corresponding to EPS of RMB 7.3/10.9/15.7, and the current share price will be 35.2/23.7/16.5 times PE from 2022 to 2024, maintaining the “buy” rating.
The volume and price of cultivated diamonds have risen simultaneously, providing strong support for performance growth, and the steady expansion of production is expected to increase market share
(1) the volume and price of cultivated diamonds rose simultaneously. In 2021, the unit price of cultivated diamonds was 632.46 yuan / carat, an increase of 132.04% and the sales volume increased by 127.59%. The strong demand in the middle and lower reaches of 2022q1 led to the continuous trend of price increase, and the increase of advance receipts led to the year-on-year increase of contract liabilities by 64.65%. Diamond single crystal: in 2022q1, under the background of tight supply of upstream press, cultivated diamonds still squeeze the industrial diamond production capacity. The short supply of single crystal drives the price to continue to rise. The price is expected to increase by about 10%. It is expected that the profit margin of industrial diamonds will remain at a high level in 2022. (2) Steady expansion of production: at present, there are about 700 six sided top presses in operation. In 2021, the annual production capacity of diamond cultivation will be 333300 carats, with a capacity utilization rate of 97.78% and a production and marketing rate of 95.67%. It is expected that the raised investment will increase about 1800 presses (about 600 per year) and 1500 presses will be used to cultivate diamonds. The raised investment is expected to increase the share of diamond cultivation and consolidate the leading position of single crystal.
Strong R & D helps to achieve technological breakthroughs, improve profitability year-on-year and month on month, and have plenty of cash in hand
(1) profitability: the gross profit margin of 2022q1 is 69.17%, with a year-on-year increase of + 5.38pct and a month on month increase of + 2.82pct, mainly due to the increase in the proportion of diamond cultivation business with high gross profit margin; In 2022q1, the sales / management / Finance / R & D expense rates were 0.69% / 3.03% / – 0.77% / 5.54% respectively, with a year-on-year decrease of -1.32 / – 0.09 / – 1.21 / + 1.32pct. The decrease in the financial expense rate was mainly due to the receipt of bank acceptance deposit interest, which was conducive to the process breakthrough of cultivating diamond business under strong R & D; The net interest rate in 2022q1 was 52.78%, with a year-on-year increase of + 4.46pct and a month on month increase of + 1.9pct. (2) Operating capacity: net operating cash flow was 85 million yuan, a year-on-year increase of 167.26%, monetary capital was 270 million yuan, and there was plenty of cash on hand.
Risk tip: capacity expansion is less than expected; The demand for diamond cultivation is less than expected; Market competition intensifies.
