Yu Diamond: product structure optimization and upgrade, light luxury, boost future performance

Abstract The first half of the year continued its glory in the first quarter and continued to achieve significant growth. The company announced the first half of the performance forecast: in the first half of the year, the profit was 7658.19 million yuan to 86.792 million yuan, an increase of 50% to 70% over the same period last year. The company's first quarter results are also larger than the same period last year...
The performance of the first half of the year continued the glory of the first quarter and continued to achieve a big increase. The company announced the first half of the performance forecast: in the first half of the year, the profit was 7658.19 million yuan to 86.792 million yuan, an increase of 50% to 70% over the same period last year. The company's first-quarter results also rose by 52.80% compared with the same period of last year. The second quarter continued the glory of the first quarter.
The optimization of product structure and the further release of production capacity are the main reasons for the continued surge in performance. The company's six-sided presses were mainly used to produce traditional industrial diamonds. Some of them began to be used in synthetic diamonds this year. Synthetic diamonds belong to the light luxury sector, mainly for decorative purposes, which can replace natural diamonds to some extent, price and Gross profit margins are high. In addition, the company's diamond line project was put into production in March this year. Product structure optimization and capacity release led to a significant increase in the company's performance and revenue in the first half of the year.
The large single crystal fundraising project has driven the company's performance in the next few years. The company's large single crystal fundraising project is mainly used in the light luxury sector, and has received the official approval of the CSRC today. In fact, the company has already started using its own funds. The approval of this document will help the funds to be delivered more quickly, which can significantly accelerate the progress of fundraising projects. The estimated annual net profit of the new equipment of the fundraising project is about 800 million yuan. Since these devices are basically run independently, they can be put into use immediately after short-term debugging, so the performance will be released during the production process. To this end, we expect the results of the fundraising project for the company to be 28 million yuan, 295 million yuan and 620 million yuan in 2016-2018, which will drive the company's performance in the next few years.
It is estimated that the net profit of the company in 2016-2018 will be 197 million yuan, 436 million yuan and 718 million yuan, EPS will be 0.16 yuan, 0.36 yuan and 0.65 yuan (considering additional issuance), corresponding to the current PE 70 times, 32 times and 18 respectively. Double, maintain the company's "overweight" rating.

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