\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
Performance review
4.26 the company announced that in 21 years, the revenue was 192 million yuan, with an increase of 126.88% and 24.20% month on month, the net profit attributable to the parent was 101 million yuan, with an increase of 147.81% and 28.85% month on month, and the net profit not attributable to the parent was 97.24 million yuan, 147.10% and 33.93% month on month. 1q22 net interest rate is 52.78% (YoY + 4.46pct, mom + 1.90pct). The company’s performance achieved beautiful growth month on month and year-on-year.
Business analysis
1q22 revenue continues to grow at a high speed and the sales volume of cultivation drill is growing beautifully: from the perspective of business, the cultivation drill business continues to grow at a high speed, and the proportion is expected to increase to about 50% (accounting for nearly 40% in 21 years). The main contribution comes from the improvement of production capacity, the increase of sales volume and the year-on-year single digit increase of price; The price of industrial diamonds continued to rise.
Gross profit margin increased, expense rate decreased, and R & D investment continued to increase: 1q22 gross profit margin increased (69.17%, year-on-year + 5.38pct, month on month 2.82pct), period expense rate decreased (8.49%, year-on-year -1.29pct, month on month -2.94pct). Among them, R & D expense rate has continued to increase year-on-year since 3q21.
The installation speed increased, the contract liabilities (payment received in advance) increased significantly, and the demand continued to be strong: the 1q22 construction in progress was 52.53 million yuan, an increase of 90.78% over the end of 21, mainly due to the construction of phase II infrastructure project and the increase of equipment under installation. The installation speed is expected to increase. 1q22 fixed assets increased by 81.38 million yuan compared with the end of the year. 1q22 contract liabilities (payment received in advance) were 40.34 million yuan, an increase of 64.65% at the same time. 1q22 net cash flow from investment activities was – 17.36 million yuan, a decrease of 74.62%, mainly due to increasing production capacity construction. The net cash flow from operating activities was 84.98 million yuan, an increase of 167.26%, mainly due to the expansion of business scale and the increase of loan received.
Increase production actively and have sufficient confidence in development: 3.27 the company announced that it plans to raise no more than 4 billion yuan to cultivate diamond intelligent factory (2.06 billion yuan, including 1.6 billion yuan for equipment purchase), power phase II industrial diamond and cultivate diamond intelligent factory (1.6 billion yuan, including 1.37 billion yuan for equipment purchase), supplement working capital (210 million yuan) and science and Technology Center (130 million yuan). It is estimated that through the fixed increase project, the production capacity will increase by no more than 1800 compressors in the next three years, and the average monthly installed speed will be increased to 50.
Investment advice
The company seized the opportunity to cultivate the drilling industry, increased R & D investment, improved the installation speed and seized the industry dividend. It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 473 / 727 / 946 million respectively, cagr58% in the next three years, corresponding to 29 / 19 / 15 times of PE in 22-24 years, maintaining the “buy” rating.
Risk tips
The construction of raised investment projects was less than expected, the price of cultivation drill fell, and the cultivation of terminal demand was less than expected
