Yellow River whirlwind: single crystal advantage significantly double wing boost development

Investment points: The company has a complete industrial chain of super-hard materials. The company has a complete industrial chain of super-hard materials, among which the main products of synthetic diamond super-hard materials have a capacity of 2.2 billion carats, ranking second in the world. The metal powder and super-hard composite materials in the main business of the two wings are put into production and promote the long-term development of the company. . Superhard materials and their industry status. Synthetic diamond is widely used in sawing, grinding, cutting, drilling and other tool materials, and single crystal synthetic diamond synthesis is the core of the superhard material industry chain. China's original six-sided top synthesis technology has gradually become the mainstream synthesis technology of synthetic diamonds with the increasing size of synthetic cavities and technological advancement; technological advancement, market extension and substitution to promote rapid development of the industry, 2011 China's single crystal synthetic diamond production 11 billion carats, with a compound growth rate of more than 20% in 2012-15. The company's synthetic diamond scale advantage is significant. The company's products cover single crystal synthetic diamond superhard materials and products, super-hard composite materials, etc. Among them, single crystal synthetic diamond has formed four categories, the current production capacity of 2.2 billion carats, ranking second in the world, with significant scale advantage and industry status . The bird boosts the company's long-term development. At the same time, based on the advantages of single crystal synthetic diamond, the company has expanded its metal powder and super-hard composite bi-wing business with the help of investment projects. The production of 12,000 tons of alloy powder and 12 million geological mineral drilling projects will help to increase the proportion of double-wing business, and the increase in the high value-added ratio will further enhance the company's profitability. Earnings forecast and company valuation: It is predicted that the company's fully diluted earnings per share in 2012 and 2013 will be 0.34 yuan and 0.46 yuan respectively, calculated based on the closing price of 7.63 yuan on August 9, corresponding to dynamic PE of 23 times and 17 times. The valuation is reasonable and maintains the company's “overweight” investment rating. Risk warning: risk of economic fluctuations; weak market expansion; large-scale expansion of synthetic diamond production capacity.

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