Event
According to the company's quarterly report for the first three quarters of 2022, the company achieved an operating income of 394 million yuan in the first three quarters of 2022, an increase of 26.60 percent over the same period last year; the net profit of returning to the mother was 129 million yuan, up 83.01 percent over the same period last year; of which, Q3 reached 132 million yuan in a single quarter, an increase of 16.09 percent over the same period last year, and net profit of 40 million yuan, an increase of 83.19 percent over the same period last year.
Brief comment
Steady growth in revenue and high performance
The company's revenue in the first three quarters increased by 26.60% compared with the same period last year, and continued to grow steadily, while the net profit returned to its home increased by 83.01% over the same period last year, continuing to achieve rapid growth. In terms of profitability, the gross and net interest rates in the first three quarters were 54.99% and 31.50% respectively, which were + 0.50pct and + 8.77pct respectively compared with the same period last year. The net interest rate increased significantly, mainly due to: (1) the profitability of the company's resource extraction business is in the period of repair; (2) expenses are strictly controlled, and there are interest income and exchange gains. The management and financial expense rates decreased significantly. In the first three quarters, the company's sales, management, R & D and financial expense rates were 7.12%, 11.11%, 11.11% and-4.86%, respectively, compared with the same period last year. + 0.49pct,-4.03pct, + 0.40pct,-4.81pct, respectively. The total expense rate for the period was-7.95pct.
Main business: the investigation of 337 won the case in an all-round way, and the volume of superhard tools continued to increase.
Resource exploitation: 337 investigation won the case in an all-round way, and the introduction of new products and new customers is expected to be accelerated.
On December 21, 2020, the United States International Trade Commission (ITC Commission) launched a 337 investigation into the company's polycrystalline diamond compact and its downstream products. On October 3, 2022, the ITC Commission issued a final award, finding that the American synthetic Company's rights against the three patents claimed by the company were invalid and terminated the investigation. The company's products have been imported into Schlumberger and Baker Hughes and have been supplied in batches, and some high-end new products are also on trial. In addition, Halliburton and Nov are being verified. With the overall victory of the 337 survey, the company has cleared the obstacles for expansion in the North American market, and the introduction of new products and new customers is expected to accelerate in the future.
Precision machining: ultra-hard tools expand smoothly and maintain high growth. The company's expansion of tools from upstream materials is progressing smoothly, and super-hard tools are expected to maintain a revenue growth rate of more than 30% in the future, and profitability will continue to improve as the scale effect is reflected.
CVD Diamond: production capacity construction is advanced as scheduled, performance release is worth looking forward to the progress of production expansion, the first batch of MPCVD equipment commissioning has entered the end, the second phase of production expansion project is also under way, capacity construction is on schedule.
On the performance level, as the first batch of 2022Q4 equipment enters stable mass production, Tianxuan Semiconductor is expected to make a profit in 2022. In addition, the number of equipment of the company will increase significantly in 2023, which is expected to release a large increase in performance.
Investment suggestion
It is estimated that from 2022 to 2024, the company's net profit will be 1.67,2.45 and 320 million yuan respectively, an increase of 81.36%, 47.09% and 30.40% respectively over the same period last year, and the corresponding PE will be 35.87x, 24.39x and 18.70x respectively, maintaining the "buy" rating.
Risk analysis.
(1) the decline in global oil and gas production demand: the company's oil and gas production business has a strong periodicity. At present, the global oil and gas production industry is still in the economic recovery cycle, if there is a significant decline in global oil and gas production in the future, it will affect the company's sales revenue from this business.
(2) the progress of production expansion is not as expected: if the company actively carries out the quantity of MPCVD equipment, if the expansion progress is not as expected, or if the debugging is slow and cannot quickly enter the stage of mass production, it will affect the performance release of CVD diamond business.
(3) cultivating diamond industry market competition intensifies: cultivating diamond industry market competition will lead to the decline of diamond rough price, which will affect the profitability of the company's CVD diamond business.