Yellow River whirlwind: fundraising and production to improve profitability

The company realized operating income of 785.384 million yuan, an increase of 34.36% over the same period of last year; operating profit of 111.0192 million yuan, an increase of 21.07%; total profit of 110.173 million yuan, an increase of 19.84%; net profit attributable to shareholders of listed companies 98.427 million yuan, an increase of 20.16 %; basic earnings per share is 0.1845 yuan.

Actively promote high-grade and large-crystal projects, and hope to significantly enhance competitiveness and gross profit margin. The company is actively preparing for “high-grade super-hard materials industrialization project” with a designed production capacity of 1.4 billion carats. The total investment of the project is estimated to be 773.5 million yuan. The investment of 70 million yuan, while the "big single crystal industrialization project" construction process is close to 50%, has accumulated a total investment of 0.2 billion yuan. After the two projects are put into production, the company's single crystal production capacity will increase to nearly 4 billion carats, the market share is expected to increase from the current 30% to 40%, the industry's position has increased significantly, the differentiation advantage of high quality and high price is more obvious, while improving the single Crystal profitability.

The new composite pyrophyllite and press automation project is expected to reduce production costs. The company is actively constructing a “new compound pyrophyllite synthesis experimental project”. It is estimated that the total investment of the project will be 0.49 billion yuan, and it has invested 0.46 billion yuan. At the same time, the “press automation project” construction The process is close to 50% and has invested 0.26 billion yuan. This will enhance the company's ability to control raw materials and reduce production costs.

The fund-raising project will enter the capacity release period, and the income is expected to maintain a high-growth company's pre-alloy powder capacity of 12,000 tons. It will be put into production in 2012. The output is expected to be about 5,000-6,000 tons in 2013. The unit price is about 44,000 yuan/ton, and the gross profit margin is about 40%. , slightly higher than last year.

Pre-alloyed powder is widely used in foreign countries, and the country is still in its infancy. The company's technology is leading and its scale advantage is outstanding. The products are gradually recognized by customers, the market demand is good, and the future market is worth looking forward to. The production capacity of polycrystalline composite sheets is 12 million pieces. It will be put into production in 2012. It is estimated that the output in 2013 will be about 6 million pieces. The unit price is about 20 yuan/piece, and the gross profit margin is about 35%. It is one of the most promising areas of the future diamond industry chain.

In the first half of 2013, the revenue of pre-alloyed powder and polycrystalline composite sheets nearly doubled year-on-year, accounting for 25% of the main business income. In the future, with the gradual release of production capacity, the company's operating income is expected to maintain a growth rate of 30%.

Earnings Forecast and Investment Proposal We estimate the EPS for 2013-2015 to be 0.39 yuan, 0.49 yuan, and 0.63 yuan respectively. According to the latest stock price of 6.09 yuan on July 25, 2013, the corresponding PE for 2013-2015 is 15.63X and 12.31X respectively. 9.60X, maintain the company's "Buy" rating.