The company disclosed its 2022 results:
2022 revenue of 906 million (+82%), net profit of 460 million (+92.1%), after deducting net profit of 437 million yuan (+90.5%) from non-return mother;
22Q4: Revenue of 232 million (+50.4%), net profit of 110 million (+40.6%), net profit of non-return mother of 96 million (+32.8%).
Revenue side: Cultivating drills as the biggest source of revenue
Quarterly, Q1/Q2/Q3/Q4 revenue was 1.92/2.56/2.27/232 million yuan, YOY +126.88%/91.40%/80.09%/50.36%.
By business, cultivating diamond revenue was 389 million yuan (+97.1%), accounting for 42.9% (+8.4pct). Consumer demand at home and abroad resonated, production costs were reduced and the scale of production capacity expanded, and the cultivation of the diamond industry entered a stage of rapid rise; in the industrial diamond sector, diamond microne/diamond monocrystalline revenue was 316 million yuan (+103.0%) /174 million yuan (+27.0%), accounting for 34.9%/19.2% of revenue. In the field of photovoltaics, micro powder remained high, and demand in the photovoltaic new energy sector was strong. Accelerated penetration in the consumer electronics sector; Market demand for diamond monocrystals in the industrial sector has maintained steady growth, and the company's diamond monocrystalline production capacity has increased and market expansion efforts have increased.
Profit side: Expense control is good
The gross profit margin of the main product was 63.3% (-0.8pct), and the gross margin of cultivated diamonds, diamond micropowders, and single diamond crystals was 79.3% (-2.1pct), 54.0% (+4.0pct), and 52.7% (-5.2 pct), respectively. The slight decline was mainly due to the continued expansion of the production capacity of cultivated diamonds for high-margin products and price increases.
Expense control is good, sales expenses rate 0.67% (-0.45pct); management expenses rate 1.84% (-1.23pct); R&D expenses rate 4.86% (-0.47pct) Expense control is good.
The net interest rate is 51% (+2.7pct), of which the Q4 net interest rate is 47.6% (same -3.3pct, ring -1.3pct).
Equity repurchases enhance confidence and improve long-term incentive mechanisms
On March 21, the company announced that it intends to use free capital or self-raised funds to repurchase some of the company's public shares through centralized bidding transactions. The total capital of this repurchase is 150 million to 300 million yuan, and the repurchase price does not exceed RMB 180.00 per share. Based on the upper limit of the repurchase price, it is estimated that the number of shares to be repurchased is about 833 to 1.66 million shares, accounting for about 0.58%-1.15% of the company's total shares. All of the shares repurchased will be used to implement employee stock ownership plans or equity incentives.
Investment advice: buy ratings
Cultivating Diamond currently has low penetration and high growth, and Strength Diamond is focusing on its main business. Currently, the active expansion of production has significantly strengthened its position in the industrial chain, and it is expected that priority will be given to enjoying industry expansion dividends. The company's net profit for 2023-2025 is predicted to be 738, 1006, and 1,181 million yuan (previous value was 737 million yuan and 993 million yuan in 2023-2024, due to slight updates to annual performance data), corresponding to PE19.3, 14.2, and 12.1x in 2023-2025, maintaining the “buy” rating.
Risk warning: The risk that industry demand falls short of expectations, industry total measurement deviations, industry prices fall short of expectations, capacity expansion falls short of expectations, and information used in research reports is not updated in a timely manner.