Traditional single crystal is stable, PCD and metal powder are growing rapidly

event:

The Yellow River cyclone released its annual report, operating income and net profit reached 1.256 billion yuan and 171 million yuan respectively, an increase of 23.22% and 30.77% respectively; the basic earnings per share was 0.32 yuan. The gross profit margin was 33.02%, an increase of 1.74 percentage points year-on-year; the expense ratio was 18.69%, down 0.48 percentage points year-on-year; the net profit margin was 15.38%, an increase of 1.06 percentage points year-on-year. With the increase in gross profit margin and the decrease in period expenses, Net profit margin increased by more than one point; quarterly, operating income and net profit in the fourth quarter were 376 million yuan and 50.07 million yuan respectively, up 41.89% and 41.7% year-on-year, EPS in the third quarter was 0.09 yuan, profitability continued to rise, profitability The situation is better than other companies in the same industry, in line with market expectations, due to the increase in the volume of PCD polycrystalline composite sheets and pre-alloyed metals and the increase in the gross profit margin, the company's performance remains the best growth company in the diamond industry chain.

The company's future investment highlights: 1) the demand for diamond single crystal particles is stable, the price is “steady”, the gross profit rate is continuously improved with the improvement of technical process; 2) the pre-alloyed metal powder continues to increase in volume, and with the increase of the finished product rate, the hair The interest rate continues to rise; 3) The gross profit rate of PCD polycrystalline composite sheet is also rising with the improvement of technology and process; with the continuous improvement and mature technology of the company's high-grade PCD polycrystalline composite sheet, its future is in coalbed methane and tight gas. The application of new fields such as shale gas will continue to be opened, resulting in sustained and steady growth. Without considering the high-grade PCD market, it is estimated that the company's EPS for 13-14 years is 0.42 yuan and 0.59 yuan, corresponding to PE 16.7 times and 11.9 times, giving a "strongly recommended" rating. Considering the broad application prospects of the company's PCD polycrystalline composite sheet in the fields of coalbed methane, tight gas and shale gas, it is the first choice for long-term value investors.

Positive factors:

1. The comprehensive net interest rate has increased by 1.06 percentage points, resulting in a substantial increase in net profit.

The company's operating income and net profit reached 1.256 billion yuan and 171 million yuan respectively, an increase of 23.22% and 30.77% respectively; the basic earnings per share was 0.32 yuan. The gross profit margin was 33.02%, an increase of 1.74 percentage points year-on-year; the expense ratio was 18.69%, down 0.48 percentage points year-on-year; the net profit margin was 15.38%, an increase of 1.06 percentage points year-on-year. With the increase in gross profit margin and the decrease in period expenses, Net profit margin increased by more than one point; quarterly, operating income and net profit in the fourth quarter were 376 million yuan and 50.07 million yuan respectively, up 41.89% and 41.7% year-on-year, profitability continued to rise, and profitability was better than other companies in the same industry. In line with market expectations, the company's performance is the best growth rate in the diamond industry chain due to the increase in the volume of PCD polycrystalline composite sheets and pre-alloyed metals and the increase in the gross profit margin.
2. The demand for pre-alloyed metal powder is high and the space is large.

The company's pre-alloyed metal powder is gradually accepted by downstream traditional elemental powder customers, and the sales volume continues to increase. We expect the production of metal powder in 13-14 years to reach 7,200 tons and 10,000 tons respectively, which will bring the company revenue of 370 million yuan and 490 million. Around the yuan, the contribution of profits of 72 million yuan and 100 million yuan, EPS increased by 0.13 yuan and 0.18 yuan, becoming one of the company's new core profit growth point.

The pre-alloyed metal composite powder is a novel metal composite powder developed on the basis of the original elemental metal powder. Compared with the traditional elemental powder, it also has the characteristics of fine powder particles, uniform alloying composition, good cold forming property and high compactness of the sintered body. Metal composite powder products have been used and popularized for many years in foreign countries, but the domestic use ratio is still very low; the current domestic market penetration rate is not high and is mainly monopolized by foreign products, the price of imported products exceeds 100,000 yuan / ton, which is a typical high-margin product. . One of the company's 11-year fixed-income projects, the “12,000-ton alloy powder project”, has become the largest pre-alloyed metal powder producer in China, with the largest domestic market share. In terms of market structure, in addition to the company, only two scientific research institutions in China are conducting experimental production and are far away from industrialization. In the future, the market pattern of the blue ocean guarantees the stability of the company's product prices.

Compared with imported pre-alloyed metal powder products, the company's pre-alloyed metal powder is “available for customers” and its price is only about half of the foreign price, about 55,000 yuan/ton, and domestic tradition. The price of elemental powder is 45,000 yuan/ton, and the quality of diamond products of downstream customers is much better than that of traditional single-product powder. It has been recognized by many downstream customers, and it has a great substitute for traditional single powder in the future. space. Conservative calculations, the demand for metal powder in China in the past 13 years is about 4.8 billion yuan, a year-on-year increase of 20%. The space for pre-alloyed metal powder to replace traditional elemental powder is huge. With the gradual expansion of the company's production capacity, especially after the full investment of the fixed-income project, the capacity will be released quickly. At the same time, with the improvement of the process and the improvement of the yield, the metal powder gross profit rate will be further improved. Improvement.

3. High-end PCD has a lot to do in the field of unconventional natural gas mining.

The development of unconventional natural gas faces the harsh working environment of large well drilling depth and complex rock formation. Traditional cemented carbide drill bits are expensive and inefficient. At present, most shale gas and tight gas mining are gradually turning to PCD drill bits. The company successfully developed the production technology of polycrystalline diamond compact (PCD) several years ago. After years of research and transformation, it has been mass-produced in 10 years and has become the fist product of the company's diamond deep processing products. It is understood that the company's mine PCD film has been tested in Shenhua and other coal fields and has begun to provide products to Shenhua. The product is ten times more efficient than conventional carbides, and the cost is only 1-2 times higher, which is very cost-effective. We expect the company's 13-year composite film production to increase by more than 40% over 12 years. The production of composite tablets in 13-14 years will reach 7.2 million pieces and 8.2 million pieces (including oil tablets and picks), with sales revenue of 170 million yuan and 260 million. Around the yuan, the gross profit margin will reach 37%. The net profit of 13-14 years is conservatively estimated to reach 30 million yuan and 53 million yuan respectively, and the EPS is about 0.06 yuan and 0.1 yuan.

According to public information, polycrystalline diamond compacts are currently used mainly in coalfield mines, petroleum, unconventional gas drills and high-end machine tools, with a market size of more than 30 billion yuan. Compared with traditional single crystal materials, polycrystalline diamond compacts have the characteristics of good adhesion, large cutting area and high efficiency, and are potential substitutes for single crystal products. At the same time, diamond polycrystalline composite sheets are typical import substitutions. The price of the product is minimally affected by the decline in the price of diamond single crystal. The polycrystalline diamond composite sheets produced by the company are mainly divided into three categories: 1) polycrystalline diamond composite sheets for coal, the company's product price is about 20-25 yuan/piece; 2) petroleum drilling special diamond composite sheet, the company's product price is about 400. Yuan/Piece; 3) Shaped diamond composite sheet, the company's product price is about 930 yuan / piece; mainly used in mining equipment and other links. The price of the above products is 30%-60% lower than the price of imported products, which is a typical import substitute.

4. The gross profit margin of diamond single crystal products has risen steadily.

The company's main products, diamond single crystal particles, achieved sales revenue of 890 million yuan in 12 years, an increase of 21.9% over the same period of last year. Exceeding our previous expectations, the gross profit margin of products was 32.9%, an increase of 0.05 percentage points from the previous month. Currently, the proportion of sales of all products is 72%. It is still the main source of performance for the company (Figures 5 and 6). With the implementation of the company's new fixed-cast project of diamond single crystal particles, the process will be further optimized, the production cost will be further reduced, and a stable profit source can be maintained in the future.

With the rapid increase in the volume of polycrystalline composite sheets and pre-alloyed metal powders in the future, the proportion of traditional diamond single crystal particles will gradually decline, which is beneficial for the company to adjust the source of profits and ensure stable profitability. We have determined that the price of diamond single crystal particles will remain stable for 13 years, and the company's performance growth will be guaranteed in the future.

Negative factors:

1. The risk of falling diamond monocrystalline particles.

Although diamond single crystal particles generally maintain a relatively stable growth of about 15-25% at the demand end, the concentration of diamond enterprises is currently high, but if the capacity expansion is faster, it may bring the price of diamond single crystal particles. keep falling.

Business Outlook:

1. The high-end shaped polycrystalline diamond compact (PCD) is gradually released.

Due to the demanding and difficult manufacturing process, the special-shaped picks have been monopolized by several foreign polycrystalline composite companies. The price of the products has reached about 2,000 yuan per piece, which is expensive. The mining pick of one of the company's special-shaped polycrystalline composite products is currently priced at 950 yuan per piece. The demand for various types of geotechnical excavation equipment is rapidly increasing, and its proportion of polycrystalline composite sheets is also rapidly increasing. For a long time, China's shaped polycrystalline diamond composite sheets rely on imports and are one of the core consumable parts for high-end tunneling equipment. After cutting into the field of polycrystalline diamond compacts in recent years, the company actively developed heterogeneous polycrystalline diamond compacts. In the first half of the year, it has mass-produced such products in the first half of the year. It is expected that such products will increase with the recognition of customers in 12 years. Market demand will gradually open.

2. High-end nano-scale micro-powder continues to grow.

The company's micro-powder business unit began trial production of high-end nano-scale diamond micro-powder (about 100nm in diameter) in the past 10 years. After several years of technical transformation and upgrading, the current technology is mature, and the product quality has been recognized by overseas customers and orders are sufficient. With the gradual expansion and release of the company's micronized powder capacity in the future, its high-end micronized powder will gradually contribute to the company's performance. It is estimated that the company's annual output in 13 years will reach 2 million carats, and the price will be 5 yuan per carat. Due to the high technical barriers, the current gross profit is as high as 80%, which has become a new bright spot for the company.

The low-end and high-end of the diamond micro-powder industry products vary greatly, and the application fields are different. The low-end diamond micropowder is produced using the type I material (the lowest grade in the grade) produced in the diamond production. The price is only 0.4 yuan/carat, which is mainly concentrated in the production of Henan Yucheng and other regions. The low-end micron-powder technology has a low threshold, and the processing costs in these areas are relatively low, mainly in the lower-end applications, such as stone processing, floor tile cutting, and runway construction.

Nano-scale high-end micro-powder, complex production process, strict requirements on particle size distribution and particle morphology, high difficulty, application field is also different from low-grade micro-powder. Nano-sized micropowders are often used in the semiconductor industry; they can also be used to polish the micropores in the middle of the wire drawing die; in addition, the polishing of the LED sapphire (Al2O3) substrate requires more diamond micropowder. The high-end nano-scale micro-powder market has a large space. Through research, we are more optimistic about its future market. In the high-end precision grinding field using traditional SiC abrasives, the future will gradually be replaced by more efficient and cost-effective diamond micropowder.

3. High-grade PCD drill bit is a must for shale gas and tight gas mining.

Compared with traditional conventional natural gas, shale gas and tight gas-rich reserves have attracted more and more attention. Overseas shale gas mining has entered the commercial stage, but shale gas mining is much more difficult than traditional oil and gas exploration, and the formation encountered in the mining process is more complicated, which in turn has led to the application of high-end PCD drill bits.

According to relevant information in the industry, the depth of traditional oil exploitation is generally 1000-3000 meters, and the depth of shale gas drilling wells, even in places with good geological conditions overseas, such as the United States, the average depth still needs to reach several kilometers, due to geological structure in China. Complex, shale gas mining depth can reach 8000-10000 meters, and in this process many times to cross a variety of bottom layers, the traditional carbide drill bit appears pale and vulnerable, and low efficiency. If high-grade polycrystalline composite sheets are used as drill bits, efficiency can be effectively improved and costs can be reduced. We expect that the unconventional natural gas field will become a new application field for polycrystalline composite sheets.

We have judged that as one of the best companies in the domestic PCD polycrystalline composite sheet technology, we will actively carry out research and development of shale gas and tight gas opening using high-grade PCD products, and the imagination space is huge in the future.

profit prediction

The company's profit forecast: The company's 13-14 year EPS is expected to be 0.42 yuan and 0.59 yuan, corresponding to PE 16.7 times and 11.9 times, giving a "strongly recommended" rating.

Investment Advice:

Highlights of the company's investment: 1) The demand for diamond single crystal particles is stable, the price is “steady”, the gross profit margin is continuously improved with the improvement of technical process; 2) the pre-alloyed metal powder continues to increase in volume, and with the increase of the finished product rate, the gross profit rate Continued increase; 3) PCD polycrystalline composite sheet gross profit rate continues to rise with the improvement of technology and process; with the company's high-grade PCD polycrystalline composite sheet process technology continues to improve and mature, its future in coalbed methane, tight gas and The application of new fields such as shale gas will continue to be opened, resulting in sustained and steady growth. Without considering the high-grade PCD market, it is estimated that the company's EPS for 13-14 years is 0.42 yuan and 0.59 yuan, corresponding to PE 16.7 times and 11.9 times, giving a "strongly recommended" rating. Considering the broad application prospects of the company's PCD polycrystalline composite sheet in the fields of coalbed methane, tight gas and shale gas, it is the first choice for long-term value investors.

investment risk

1. The amount of PCD and pre-alloyed metal powder is lower than expected;

2, the price of diamond single crystal fell

Alloy steel refers to steel with high strength and good chemical stability at high temperature. It includes two types of anti oxidation steel (or high temperature resistant steel) and hot steel. Anti oxidation steel generally requires good chemical stability, but the capability is limited. High temperature strength and the corresponding oxidation resistance of heat and strong steel are required. Heat-Resistance Steel is often used in the manufacture of boiler, steam turbine, power machinery, industrial furnace and aviation, petrochemical and other industrial sectors in the work of the high temperature parts. In addition to the requirements of high temperature strength and high temperature oxidation corrosion, sufficient toughness, good shaping and welding are also required according to the different use, as well as a certain organizational stability. In addition,  some new low chromium nickel oxidation are also developed .

Heat-Resistance Steel

Heat-Resistance Steel ,Heat-Resistant Material Handling Steel,Heat-Resistant Steel Tube,Heat-Resistant Black Round Steel Pipe

Jiangsu nickel alloy Co.,Ltd , http://www.xhalloy.com