November 27, 2020

Yu Diamond's performance deviates from the industry's gross profit and high net profit declines year after year

On July 15, Yu Diamond (300064.SZ) issued a plan for the increase. The company plans to issue more than 80 million shares to 5 specific investors, and raise 325 million yuan to invest in the annual production of 350 million meters of micron diamond line expansion project. And supplement liquidity.

When Yu Diamond was listed in 2010, it was widely questioned because its gross profit margin increased year after year. It was reported that the company inflated its income. Since 2011, the company's net profit and gross profit margin have fallen sharply year after year, which is in sharp contrast with the relatively stable performance of peer companies.

“The performance trend of Tongguan Company from 2007 to 2013 is basically an inverted V shape, which has been rising for the first three years of listing. After listing in 2010, it turned down. If there is no obvious downside in the synthetic diamond industry, if it is not listed The former performance has moisture, so the net profit after the listing is very difficult to understand." Financial analyst Long Yuliang bluntly.

Some people in the diamond industry told the 21st Century Business Herald that the diamonds' traditional flagship product, synthetic diamond, was squeezed by the Yellow River Cyclone (600172.SH) and Zhongnan Diamond and other industry leaders, and had to develop new products such as micron diamond lines. The degree of industrialization is still in short supply, and the future prospects remain to be seen."

Yu Diamond landed on the GEM in March 2010. The company's main business is the production and sales of synthetic diamond. A few years before the IPO, the company's performance showed explosive growth.

The financial report shows that from 2007 to 2010, the company's net profit was 2,465,900 yuan, 41,284,700 yuan, 52.461 million yuan, 75,784,800 yuan, with a compound annual growth rate of over 50%.

In 2010, Yu Diamond was listed. Since then, the company's operation has reached its peak in the following year: In 2011, the company's revenue and net profit were 465 million yuan and 142 million yuan respectively, up 81.75% and 86.39% respectively.

Accompanied by performance arrogance, from 2007 to 2009 before the listing of Yu Diamond, the company's main business gross profit margin increased from 40.72% year by year to 45.1%, and the sales net profit margin increased from 26.31% to 28.58%.

However, the main business gross profit margin and sales net profit rate of the same industry leader of the Yellow River whirlwind of Henan Diamond decreased year by year: its main business gross profit margin decreased from 29.8% in 2007 to 28.81% in 2009, and the net profit margin was 8.33. % fell to 5.36%.

Compared with the whirlwind of the Yellow River, the gross profit margin and sales net profit of Henan Diamond in 2009 were 16.29 and 23.22 percentage points higher than the former. The financial data of Yu Diamond, which is different from the industry leader, once caused market doubts. At that time, there were media reports that the company inflated revenue through related party transactions.

"The domestic synthetic diamond industry is very mature, not a new industry. As a raw material industry, there can be no huge profits, and the price of products is highly transparent. It is difficult to understand the high gross profit of Yu Diamond." People with superhard materials industry are outspoken.

After the listing of Yu Diamond's performance in 2011, it failed to continue the myth of continued growth. A paradox that is difficult to justify is that although the company still maintains a high gross margin advantage, the company's performance has turned down from 2012 and its profitability has become weaker.

According to the financial report, in 2012, 2013 and January-March 2013, Yu Diamond’s revenue was 551 million yuan, 524 million yuan and 126 million yuan respectively; net profit was 122 million yuan, 94.262 million yuan and 15.9565 million yuan respectively. The year-on-year decline was 13.52%, 23.04%, and 40.93%, respectively.

In the same period, the two listed companies in the same industry of Henan Diamond, Huanghe Cyclone and Sifangda (8.280, 0.13, 1.60%) (300179.SZ), had very different performance trends. From 2012 to January-May 2014, the net profit of Huanghe Cyclone was 171 million yuan, 210 million yuan, and 61.121 million yuan respectively, a year-on-year increase of 30.77%, 22.49%, and 22.94% respectively; the net profit of Sifangda was 343.928 million yuan. , 32.92 million yuan, 8.337 million yuan, an increase of -3.5%, -4.1%, 13.89%.

The revenue of Yu Diamonds fell by 4.74% in 2013. The company's inventory of super-hard materials and super-hard materials in that year was 36.738 million carats and 18,140 kilometers, a year-on-year increase of 108.41% and 560.6% respectively.

"Year diamond's synthetic diamond and other products have been squeezed by the leaders of Zhongnan Diamond and Yellow River Cyclone in recent years, and the advantages in the competition are gradually lost." The aforementioned superhard materials industry insiders revealed to the 21st Century Business Herald.

“The scale of the Central South Diamond and the Yellow River whirlwind is much larger than that of Yu Diamond. The latter’s space is shrinking and it has to be transferred to the new product business field,” said the industry insider.

Yu Diamond's plan to increase the number of shares revealed that the company's 325 million yuan increase in funding will be 285 million yuan to 350 million meters of micron diamond line expansion project, the project construction period is 20 months, after the completion of production can achieve an average annual revenue of 1.64 100 million yuan, the average annual net profit after tax is 41.44 million yuan, and the investment recovery period is 5.4 years.

The additional issuance plan shows that the downstream of the micron diamond line industry is mainly in the field of silicon-based battery slicing, silicon rod opening, silicon rod cutting, etc. in the solar photovoltaic industry, as well as LED substrate sheets and epitaxial wafers in the sapphire industry.

"As we all know, the status quo of the photovoltaic industry is in a downturn, and Yu Diamond is rushing to go to the hospital. It will invest huge amounts of raised funds in the upstream of such an industry, and hope to save the performance in the fire. This is not to blame the future." Materials industry insiders said.

Perhaps because of the bearishness of the prospects, the company's share price fell 2.81% on the day of the announcement of the Henan diamond growth plan on July 15. Since then, the stock price has continued to slump. As of the date of publication, the stock has fallen 6.79% to 5.63 yuan.

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