Investment Highlights: Performance Review: Earnings decline in the third quarter. In the first three quarters of 2012, the company achieved operating income of 413 million yuan (+21.24%), net profit attributable to owners of the parent company of 109 million yuan (+0.17%), corresponding to basic earnings per share of 0.18 yuan. In terms of a single quarter, revenue was 138 million yuan, a decrease of 0.64% year-on-year and a 13% quarter-on-quarter decrease. The net profit attributable to owners of the parent company was 0.37 billion yuan, a decrease of 12.84% year-on-year and a decrease of 2.83% quarter-on-quarter. Specific business situation of the company: In terms of single crystal, the company's shipments in the third quarter were about 350 million carats, a 10% increase from the second quarter (320 million carats), and the unit price was 0.37 yuan/carat, which was slightly higher than the second quarter (0.39 yuan/carat). Declining because industry demand is affected Macroeconomics Impact, competition is relatively intensified; in the micro-powder, in the third quarter, the company mainly sells high-end products, with a production of 40 million carats, and the unit price is estimated to be above 0.6 yuan/carat. Highlights in the third quarter : The comprehensive gross profit margin has increased significantly. In the third quarter, the company's main business gross profit margin was 48.81%, significantly higher than the first quarter's 42.83% and the second quarter's 41.61%. In terms of single crystals, due to the price drop, the gross profit margin in the third quarter fell slightly to 41.17%, and due to the sharp increase in the gross profit margin of micro-powder, the rough estimate is close to 60%, driving the overall gross profit margin to increase significantly. The expansion of new business areas lays the foundation for future growth: Last year, the company entered the micro-powder field by means of joint venture holding. This year, it successfully replicated this model to develop large-scale synthetic diamond (including jewelry-grade large single crystal) business. Micronized powder (different from crushed material) is a trend product of the diamond industry in the future. It is mainly used for precision grinding and functional applications based on its thermal and optical properties. The application prospects are unlimited. With the development of large single crystal business, the company is expected to Gradually occupy a place in the diamond market. According to statistics, in 2011, China’s imported diamonds amounted to 6.1 billion. Dollar . Investment suggestion: We expect the domestic macro economy to stabilize and rebound in the fourth quarter. The company's 4Q results will see an increase. The EPS for 2012-2014 is expected to be 0.27 yuan, 0.36 yuan, 0.45 yuan, and the target price for 6-12 months is 8.10 yuan, maintaining a strong recommendation rating. Risk warning: The macroeconomic growth rate fell more than expected.
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Zhejiang Meide Machinery Co.,Ltd , https://www.meidemachinery.com