Investment logic
Composite superhard material leader, extend the cultivation of drilling the whole industry chain. The company is mainly engaged in oil and gas exploration and precision processing, accounting for 58% of 1H22 revenue and 35%. For 21 years / 1-3Q22, the revenue is 42am 400 million yuan, + 31% Universe 27%, the net profit returned to the mother is 90.13 billion yuan, + 22% Universe 83%. In June, 22, he acquired 53.2% shares of Tianxuan Semiconductor, which is mainly engaged in the R & D, production and sales of CVD nurturing diamonds; in July, Tianxuan Semiconductor cooperated with Hainan Jewelry, and in November, it established a joint venture with the company's director Fang Rui to establish Henan Zanran Jewelry, extending the retail layout of Tian Xuan Diamond.
Petroleum composite: export-oriented, overseas economic recovery + binding core customers, the company hopes to benefit first.
The decline in oil prices in the past 20 years and the decline in oil and gas production have been a drag on the company's performance, and have gradually picked up since 4Q20. Downstream customer concentration, CR5 more than 90%, the company has cooperated with two of the major customers, hoping to expand new key customer contribution increment. Compared with overseas counterparts, the company benefits from the advantages of Henan superhard material industry cluster, 21-year / 1H22 gross profit margin 61.3% 1H22 62.5%, significantly higher than the overseas leader in the United States synthetic 17.4%; compared with domestic, the company focuses on medium-and high-end products and avoids price war. Mining revenue is expected to increase by 26% in 2022.
Super hard tool: product upgrade + import substitution driven growth. Company blade: the proportion of cutting tools is 2:1, and the downstream 80% of high-end customized precision tools are used in new energy vehicles. Compared with the same industry, the scale of the company's tool business is second only to Wolde / Fu Nike Inc, with 21-year precision processing revenue of 160 million yuan, + 45% and gross profit margin of 38% (+ 4PCT), second only to the industry leader Wolde's 44% Ting 22Q1-3 precision processing revenue of 90 million yuan and + 26%, and precision machining revenue is expected to increase by 26% in 2022.
CVD: short-term cultivation drill release profit, long-term industrial application prospect is broad. According to the estimates of supply and demand, we believe that the current growth in global demand for nurtured drills cannot match the upstream expansion capacity, and global inventories will remain high, putting some pressure on the wholesale prices of rough and bare drills next year and the year after next. The company extends the cultivation of drill retail, hoping to internalize part of the price fluctuations, digest part of its own production capacity, and maintain a relatively stable profit level. As one of the few domestic CVD enterprises that master equipment manufacturing technology and break through the independent design of microwave sources of core components, it has achieved supplier-oriented development. 1H22 has put into production 100 sets of equipment, which is expected to reach 400 by the end of the year and 1000 by the end of 23.
Profit forecast and investment suggestion
The main industry benefits from the oil service boom upstream + super hard tool product upgrade, look beautiful; CVD nurture drill thickening profit. It is estimated that the EPS for 22-24 years will be 0.34 yuan and 0.49 yuan respectively, and the PEG for 23 years will be 0.45 yuan. The target price will be 13.69 yuan, and the "overweight" rating will be given for the first time.
Risk hint
Oil price fluctuations, CVD technology research and development is not as expected, nurturing diamond prices fall, exchange rate fluctuations.