\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 071 Henan Liliang Diamond Co.Ltd(301071) )
The company disclosed that in the first quarter report of 2022, the revenue was 192 million yuan, yoy + 126.88%, and the net profit attributable to the parent was 101 million yuan, + 147.8%, deducting the net profit not attributable to the parent was 97 million yuan, yoy + 147.1%, and the performance fell below the upper limit of the notice.
Income side: cultivate diamonds and continue high growth
Q1 and Q1 increased by 2296% and 2196% year-on-year, respectively.
By business, it is expected that cultivated diamonds will continue the triple-digit growth trend, accounting for 50%, and industrial diamonds (single crystal + micro powder) will maintain double-digit growth.
Profit side: cultivating drilling business with high gross profit and promoting profitability
Q1 gross profit rate is 69.17% (+ 5.4pct,), net profit rate is 52.8% (+ 4.5pct). The improvement of profitability is expected to be mainly due to the optimization of the company’s product structure with high gross profit and the tight supply of industrial diamond (transfer of production capacity to cultivation drill). The sales expense rate is 0.68% (- 1.3pct), the management expense rate is 3.02% (- 0.05pct), and the R & D expense rate is 5.5% (+ 1.3pct).
Focus of 22 years: actively expand production and consolidate growth
According to the calculation of the company’s fixed growth plan, it is expected to expand about 1800 equipment in the next three years. If the project is successfully implemented, the company will significantly strengthen its position in the industrial chain and is expected to give priority to the industrial expansion dividend.
Investment suggestion: buy rating
At present, the company has low penetration and high growth. Henan Liliang Diamond Co.Ltd(301071) focuses on its main business and is expected to enjoy a valuation premium. It is predicted that the company’s net profit attributable to its parent company from 2022 to 2024 will be 447 million yuan, 693 million yuan and 912 million yuan, with a year-on-year increase of + 87%, + 55% and 32%, corresponding to pe31 / 20 / 15x from 2022 to 2024, maintaining the “buy” rating.
Risk tips: there are risks that the industry demand is lower than expected, the calculation deviation of the industry total, the industry price is lower than expected, the capacity expansion is lower than expected, and the information used in the research report is not updated in time.
