Yu Diamond: Large single crystal and wire saw business began to force

The sales revenue and profit of Henan Diamond in the first quarter showed a significant increase year-on-year. The main reason was that diamond wire saws and large single crystal products began to increase in volume. The company's strategic adjustment and product structure adjustment and technological innovation began to show results. We are optimistic about the company's Business trends and more...
In the first quarter, Yu Diamond's performance and profit increased significantly year-on-year. The main reason was that diamond wire saws and large single crystal products began to increase in volume. The company's strategic adjustment and product structure adjustment and technological innovation began to show results. We are optimistic about the company's operations. Trends and diversified business strategies, as well as the huge demand space downstream of the company's gem-quality single crystal, maintain the “strongly recommended-A” investment rating and raise the target price to 20 yuan.

In the first quarter, the company's sales revenue and net profit were 157 million yuan and 21 million yuan respectively, with a year-on-year growth rate of 25% and 31% respectively. In the case of the stable maintenance of traditional synthetic diamonds, the growth was mainly due to the new product diamond. The wire saw and the large single crystal volume, the company adjusted the corresponding strategy and product structure, while the product diversification strategy was in place, the performance has a significant growth.

Diamond large single crystal is expected to become the new engine for business growth in 2015. At present, the company has been able to synthesize high-quality diamond large single crystals of 8mm or more. It is the only company that has mastered the six-sided press batch synthesis of diamond large single crystal technology of more than 3mm. In 2014, the contribution rate of large single crystal sales and profits was about 10%. In the first quarter of 2015, the profit contribution rate of large single crystals was as high as 25%, and the gross profit margin was between 50% and 70%, significantly surpassing the general diamond powder. . It is expected that the large single crystal volume will increase in 2015. At present, the single crystal market is relatively mature, and the market space of large single crystals is still in a stage of rapid expansion.

The company's gem-quality single crystal enters the blue ocean of low-end luxury consumption. Once the cooperation model is mature, the growth space is huge. At the same time, if the brand can be successfully realized in the future, the downstream demand of the company will be expanded again. At present, the downstream application of gem-quality single crystals to the consumer sector has just begun. Downstream uses are primarily used for consumer decoration. The company is negotiating cooperation with a famous luxury consumer brand. Once the new cooperation model is established, the new blue ocean market will open. Synthetic diamonds have a great price advantage over natural diamonds in terms of price. We believe that the application of synthetic diamonds in the luxury sector is only a matter of time, and the blue ocean of light luxury consumption has just opened. We predict that in the future, synthetic diamonds can follow the idea of ​​artificial crystals, and brand placement (synthetic crystal Swarovski) will appear, and the downstream demand blue ocean will expand again.

Maintain “strongly recommended-A” investment rating. We are strongly optimistic about the company's gem-quality single crystal in the future to open the downstream consumption of the blue ocean market, estimated 2015-2016 earnings per share of 0.26 and 0.35 yuan, this year will achieve a larger product direction transformation.

Risk warning: The new business is lagging behind and the capacity release is lower than expected.

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