2022H1's revenue increased 33% compared with the same period last year, and its net profit increased by 83% compared with the same period last year. The performance is in line with expectations. 1) in the mid-2022 report: 2022H1 realized revenue / return net profit / deducted non-net profit of 2.6 09000,000 yuan, an increase of 33%, 83%, 84%. Overseas business income was 120 million yuan, an increase of 38% over the same period last year, mainly due to the recovery of the oil service market in the first half of the year and less affected by the epidemic, and the company's overseas business continued to recover. 2022Q2 realized revenue / return net profit of 140 million yuan in a single quarter, an increase of 28% and 83% over the same period last year and an increase of 7.5% and 16.4%, respectively.
2) profitability: 2022H1 gross profit margin / net profit margin is 55% / 33% respectively, year-on-year + 1.07 PCT / 1.12pct/+8.53pct / net profit is 56% / 33%, year-on-year + 1.12pct/+8.53pct, month-on-month + 0.88pct/+0.61pct. 3) expense side: the expense rate during the 2022H1 period is 24%, year-on-year-5.89pct. Among them, the sales / management / finance / R & D expense rates in the first half of the year are 7%, 21%, 4%, 11%, and + 0.3pct/-2.2pct/-3.97pct/-0.19pct, respectively. The overall cost management and control capability of the company continues to be optimized.
The demand for oil composite chips has recovered, the precision processing business is full of resilience, and CVD fosters a large diamond space. 1) Resource exploitation business: revenue in the first half of the year was 150 million yuan, an increase of 32% over the same period last year; gross profit margin was 63%, year-on-year + 0.13pct. The company's petroleum composite products continue to recover with the recovery of demand in the oil service industry, import substitution + major customer strategy continues to advance, and revenue is expected to return to the pre-epidemic level.
2) Precision processing business: revenue in the first half of the year reached 90 million yuan, an increase of 29% over the same period last year; gross profit margin was 40%, year-on-year-1.39pct. The production of downstream new energy vehicles is affected by repeated epidemic conditions and other factors, the company's precision processing business is still tough, maintain rapid growth, import substitution + alloy substitution strategy continues to promote, open up the downstream market.
3) CVD nurturing diamonds: domestic CVD nurturing diamonds is one of the companies with the most advanced technology reserves, the largest expansion efforts and the highest quality; synthetic diamonds are not only cultivated diamonds, but are expected to cut into the field of new generation semiconductor materials in the future. 1) the progress of production expansion: the first phase of 100000 carat cultivated diamond production line has entered the stage of commissioning and operation; the construction of the second phase of 100,000 carat production line has been started; the self-developed MPCVD equipment has fewer production bottlenecks, and the company's production capacity is expected to expand rapidly and effectively; 2) Product quality: breaking through the Eafer color nurturing diamond technology, it has been able to steadily produce large particles and high grade colorless CVD cultivated diamond raw stones, leading the industry. 3) layout of the whole industry chain: cooperate with Hainan jewelry to demonstrate the possibility of establishing a joint venture company, building and cultivating diamond production capacity in Hainan free trade port and the whole industry chain cooperation, which is expected to help the company to expand production in the free trade zone and expand downstream sales channels.
Nurture the diamond industry: low penetration and high growth, close to 10% inflection point, equivalent to the low penetration and fast growth rate of the new energy vehicle industry in 2020. According to our in-depth report released in May, the global demand for cultivated diamond raw stones is expected to increase from 9.3 billion yuan in 2021 to 31.3 billion yuan in 2022-2025, representing a compound growth rate of 35%. In 2021, the penetration rate of cultivated diamond production is about 7%, the penetration rate of output value is 5%, which is close to the inflection point of 10%, which is expected to replicate the high growth of new energy vehicles. It is estimated that by 2025, the penetration rate of global cultivated diamond sales will reach 16%. The penetration rate of the United States as a major consumer will reach 23%.
Profit forecast and valuation
It is estimated that the company's home net profit in 2022-2024 is 1.7 billion yuan, an increase of 80%, 48%, 25%, and a compound growth rate of 49%, corresponding to the PE of 50-34-27, maintaining the "buy" rating.
Risk hint: cultivate diamond competition pattern and profit change, raw material price fluctuation risk