Yu Diamond: Product prices increase or exceed expectations

Private equity has entered the arena vigorously, but Xiaofei has chosen to “escape”—this is the latest incident in diamond production leader Yu Diamond (300064.SZ).

It is understood that due to the insufficiency of product supply, many people in the industry believe that there is a possibility that the price increase of the company's products will exceed expectations.

In spite of this, due to factors such as small non-lifting of the ban, the company's recent performance in the secondary market has been poor. As of May 20, the company closed at 16.60 yuan, down by about 17% from its April high.

Diamond prices rose slightly

“The theme of the company is still quite unique. There are not many listed companies that make diamonds in China,” said Yang Zhongning, an analyst at Guodu Securities.

It is understood that the main business of Henan Diamond is the R&D, production and sales of synthetic diamond and its raw and auxiliary materials as well as the research and development of synthetic diamond synthesis equipment.

Synthetic diamond has high compressive strength, high wear resistance and corrosion resistance, so it is widely used in various tools such as sawing, grinding, cutting and drilling.

According to news from the China Superhard Materials Network, the price of diamonds has risen again recently. The price of diamonds in the country, such as Zhongnan Diamond and Huanghe Tornado (600,172.SH), has increased. The price of diamonds generally rose by about 0.5 yuan per carat, of which diamonds from Central South diamonds rose by nearly 10%.

From the perspective of the entire industry, diamond production companies have full orders, and some companies even have orders for months.

"Our products do have some model prices, but the rate of price increases is not obvious." On May 20, Zhang Kai, a representative of Henan Diamond Securities, told the reporter of the "Financial Business" of the China Business Daily.

"This time the price adjustment is not caused by the price increase of raw materials, mainly due to changes in supply and demand." Yuan Zhibin, researcher of China Investment Advisor Metallurgical Industry, said that on the one hand, with the traditional abrasive cutting technology gradually being eliminated, using diamond as the abrasive The demand for cutting equipment has increased substantially, which has led to an increase in demand for diamonds. On the other hand, domestic sales of diamonds have increased significantly in recent years, and domestic supplies have been affected by this decline, which has intensified supply shortages.

Zhang Kai also said that the company's downstream is mainly a number of tool manufacturers, including saw blades, grinding blocks, drill bit producers, etc. From the current point of view, demand is indeed relatively strong.

CICC analyst Chen Hua said in his research report that the value of synthetic diamond products has risen slightly, raising the possibility of profit increase. At present, the company's production and sales ratio is close to 100%, and it is expected that the degree of prosperity will continue. The gross profit rate in the second quarter was slightly higher than that in the first quarter.

High gross margin is the highlight

It is understood that China is a big producer of synthetic diamonds. According to statistics of the Diamond Industry Association in 2009, global synthetic diamond production was 5.5 billion carats, while China accounted for about 70% of the total. The Henan region where Yu Diamond is located is China's main production base for synthetic diamonds, which accounts for about 80% of the total output of synthetic diamonds in China. The Yellow River Cyclone, Yu Diamond and the upcoming IPO's Zhongnan Diamond 3 companies accounted for 80% of the total production in Henan.

Among them, Henan Diamond’s main competitors are the South China Diamond and the Yellow River whirlwind. Zhongnan Diamond is one of the world's largest manufacturers of synthetic diamonds, with production capacity ranking first in the country; Yellow River Cyclone production ranks second in China.

"The Yellow River Whirlwind is similar to the products we make. Relatively speaking, they are doing more downstream products, including tools," Zhang Kai said.

The reporter learned that Henan Yu Diamond's gross profit margin and net profit margin are much higher than other companies in the industry. The quarterly report shows that the gross profit margin of Henan Diamond is 45.75%, and the gross profit margin of the Yellow River Tornado is only 25.78%.

“Yuyu Diamond has a higher gross profit margin. On the one hand, the company originates from suppliers of raw and auxiliary materials, and raw material self-sufficiency reduces costs; on the other hand, the company’s technology is advanced, and all equipped with large presses are conducive to upgrading the proportion of high-grade products and increasing production. Efficiency," said an analyst at a brokerage in Shanghai.

Although the indicator of gross profit margin fell, but from the indicator of net profit growth, the performance of the Yellow River Whirlwind is even better. It is understood that the first quarter of 2011, Henan diamond net profit of 27,093,200 yuan, an increase of 52.79%, earnings per share of 0.18 yuan; the same period, the Yellow River Whirlwind to achieve a net profit of 31,809,800 yuan, an increase of 213.57%.

It is understood that in the near future, Henan Diamond is actively transforming and gradually expanding its R&D and products to the photovoltaic industry. The micron diamond line dedicated to the photovoltaic industry, which has attracted extensive attention in the market, has now achieved a leap from the product pilot phase to the production phase. The micron diamond cutting line production plant for the photovoltaic industry is planned to be put into production by the end of this year. The product will be mainly used for the cutting of polysilicon, monocrystalline silicon and LED sapphire materials required by the photovoltaic industry.

“This is an extension to the downstream of the industrial chain. We also like the prospect of the photovoltaic industry,” the company said.

Guoxin Securities researcher Zheng Dong predicts that the production capacity of the production line will reach 150,000 kilometers in 2012, which coincides with the excellent opportunities for the explosive growth of the photovoltaic solar energy industry and will become the company’s new profit growth.

Private equity pursuit of small non-disposal

The good prospects of the company's business have attracted all sectors and the company's top ten shareholders of tradable shares can also be described as "stars gathered" - the Chinese company's flourishing growth (630002, ** it), E-Techco Group's position are all Column out of them.

According to the company’s quarterly report, the holdings of Hongda’s Phase 1 and Phase 3 held by Sun Jiandong, the “biggest” investor in the investment community, were 2,943,000 shares and 3,422,600 shares, respectively, an increase of 1,066,000 shares and 1,595,100 shares compared to the end of 2010.

It is understood that Hong Dao had appeared in more than one stock at the end of last year, including Fujing Technology (002222, shares) (002222.SZ), Silver Wheels (002126, shares) (002126.SZ), and Ruiqi (300126). , Stocks) (300126.SZ), etc., but have chosen to withdraw in the first quarter of this year, except for the love of Henan Diamond.

In spite of this, the "Zhongxing Panyu" Yu Diamond has recently been reduced to non-profit.

On May 11, Zhengzhou Regal Wangyuyu reduced 920,000 outstanding shares through the Shenzhen Stock Exchange bulk trading platform, reducing the price to 16.50 yuan per share, equivalent to 91% of the closing price of the day, a total of ** 15.18 million yuan. The shareholding ratio decreased from 5.289% to 4.987%.

In the previous April 26 to May 6, Wang Jiayu has reduced the holding of 2.84 million shares at the price of 18.72 yuan/share in the secondary market, and reduced the 1.08 million yuan on the bulk trading platform on May 6th. Shares, the price per share is also 16.50 yuan.

In addition, on April 19, Shanghai Shangli Investment Co., Ltd. also reduced its holding of 3 million shares at a price of 18.59 yuan per share through a large trading platform, and its shareholding ratio dropped below 5%.

"Small because the cost is relatively low, so you can see the stock price, it is possible to choose to throw away. The private equity costs are relatively high, it takes a lot of time to study the company's fundamentals, so when buying and selling stocks will be relatively cautious Specifically, this is where two different types of people are pursuing different goals in the same market. It is not surprising that the two countries are not the same,” said Yang Zhongning.

CICC said that it maintains a profit forecast of 0.50, 0.75 yuan/share for the company from 2011 to 2012, an increase of 100% and 50% year-on-year. At present, the stock price corresponds to a 36-fold price-earnings ratio in 2011, and there has been no rise in the current round of diamond price increase due to the non-lifting of the ban. Based on product prices and sales volume may exceed expectations, will continue to measure the possibility of profit increase.

As of May 12, a total of 67 institutions have made predictions on the 2011 annual results of Henan Diamond, and the average forecasted net profit was 130 million yuan, an increase of 71.15% over the previous year.