The company released its 2022 results. The company achieved revenue of 90,000,000,000/ +81.9% in 2022; achieved net profit of 4.6 million/ +92.1%, with a net interest rate of 50.8% /+2.6pct; and net profit of 440 million/ +90.5% after deducting non-return to the mother. We believe that nurturing the diamond industry to continue its high boom and that the company's forward-looking production capacity layout is expected to fully benefit from industry growth, and performance is expected to continue to grow at a high rate under the rapid expansion of production capacity. Maintain a “Highly Recommended” investment rating.
Revenue continues to grow at a high rate, net interest rates have increased, and profitability has increased. The company achieved revenue of 90,000,000,000/ +81.9% in 2022; achieved net profit of 4.6 million/ +92.1%, with net interest rate of 50.8%/2.7%; and net profit of 440 million/ +90.5% after deduction of net profit to the mother. Among them, revenue from cultivating diamonds was 3.9 million/ +97.3%, revenue from diamond powder was 320 million/ +102.7%, and revenue from single diamond crystals was 170 million/ +27.3%. Among them, the company achieved revenue of 230 million million/ +50.4% in the fourth quarter alone, achieved net profit of 110 million/ +40.6%, and net profit of the non-return mother was 96 million.
The proportion of high-margin cultivated drills increased, and gross margin was relatively stable. Looking at the revenue structure, currently cultivating diamonds/diamond microns/diamond single crystals accounts for 42.9%/34.9%/19.2% respectively. Currently, cultivating diamonds has become the sector that accounts for the largest share of the company's revenue, and the high growth rate has driven the company's revenue to continue to grow. The company's gross margin in 2022 was 63.3% /-0.8pct, of which the gross margin of cultivated diamonds was 79.3% /-2.1pct, the gross margin of diamond micronized powder was 54.0% /+4.0pct, and the gross margin of single diamond crystals was 52.7% /-5.2pct. It is expected that as the share of cultivated drills with high gross profit increases, the company's gross margin will increase further.
Attention has been paid to R&D investment, and the cost rate has been declining steadily. In terms of cost rate, in 2022, the company's sales expense ratio was 0.7% /-0.5pct, management expense ratio was 1.8% /-1.2pct, financial expense ratio was -1.7% /-2.2pct, and R&D expense rate was 4.9% /-0.5pct. The company invested heavily in R&D and carried out many research projects such as large cavity diamond synthesis technology research during the reporting period to continuously enhance its technical strength and technical reserves.
The company's refinancing and fund-raising projects are progressing steadily, and production capacity is gradually being released. By the end of the reporting period, among the company's refinancing and fundraising projects, the production capacity construction progress of the Science Center and Diamond Cultivating Smart Factory projects was 4.8%, and the progress of the Power II Diamond and Cultivating Diamond Smart Factory projects was 16.5%. The company deployed production capacity in a forward-looking manner, fund-raising projects were promoted one after another, and new plants were put into operation one after another. In the face of rapid growth in market demand in the diamond industry, the release of the company's production capacity provided production capacity support for steady growth in performance.
Investment advice: We believe that cultivating the diamond industry to continue its high boom. The company's forward-looking production capacity layout is expected to fully benefit from the industry's high growth dividends, and performance is expected to continue to grow at a high rate under the rapid expansion of production capacity.
We expect the company's net profit of 23E/24E/25E to be 7.0/10.0/ 1.30 billion respectively, maintaining the “Highly Recommended” investment rating.
Risk warning: terminal demand falls short of expectations, production expansion falls short of expectations, industry competition intensifies, etc.