Yu Diamond: Capacity release reveals sharp edge
Pumps And Other Fountain Equipment Wuxi Jinshanghua Environmental Equipment Co., Ltd , https://www.jshfountain.com
After the artificial diamond industry, the newcomer Yu Diamond is the third largest producer and seller of synthetic diamond in China. The company entered the artificial diamond industry relatively late, and its market share has risen rapidly in recent years, which is a rising star in the industry. The company's shareholding structure is reasonable, the subsidiary's functions are clear, and the main business concentration is high. At present, more than 90% of its operating income comes from synthetic diamond single crystal. The company plans to enter the micron diamond line, diamond powder and diamond wheel in the next step. Industry background: Crushed stone into gold, Xiongguan global synthetic diamond is widely used superhard material. At present, 90% of global synthetic diamond production comes from China, and China's synthetic diamond production has a compound annual growth rate of 21.45%. China's synthetic diamond industry has formed an oligopoly competition pattern in which the three companies, Zhongnan Diamond, Yellow River Cyclone and Yu Diamond, occupy more than 80% of the market. The company's business: based on the main business of single crystal, waiting for the future development of the company to establish a diamond-based production as the main business, looking for the right time to continue to penetrate the downstream development policy. The company's main core competitive advantages are: the synthetic cavity is larger, and it has great advantages in synthetic equipment and technology; the diamond raw and auxiliary materials manufacturer is born, and the upstream raw material integration is more thorough. The company's production capacity in 2011 has exceeded 1 billion carats, and the new 10.2 billion carat capacity expansion project is under construction, and the production capacity will double in the next two years. The development plans for downstream investment expansion include: micro-diamond line project for photovoltaic industry; investment to set up a holding subsidiary to enter the diamond micro-powder industry; annual output of 50,000 pieces of high-quality diamond grinding wheel project. Financial status analysis At present, the company's asset-liability ratio is in the normal level. Without the unexpected investment, the company's financial status can meet the current development and expansion needs; the company's capital liquidity is general; due to the implementation of the diamond micro-powder project, the company's inventory turnover The number of days has increased significantly; the company's gross profit margin has been at a relatively high level, compared with other companies in the same industry has obvious advantages, the company's higher gross profit margin is conducive to the continued growth of synthetic diamond single crystal business. Earnings Forecast and Valuation We predict that the company's EPS for 2012~2014 will be 0.35 yuan, 0.49 yuan and 0.62 yuan respectively. Maintain “overweight†rating with a 6-month target price of $10.5.