Yu Diamond: Diamond faucet with undervalued stock price

Summary 2012 low performance expectations analysis: The company's 2012 results are significantly lower than our previous 4 cents expectations, mainly for three reasons: 1) the micro-powder business did not bring about a thickening of the performance, basically does not contribute to profits, lower than our previous expectations of 1 Dime performance. Season 4, 2011...
Low performance forecast for 2012: The company's 2012 results were significantly lower than our previous forecast of 4 cents, mainly due to three reasons: 1) The micro-powder business did not bring about a thickening of the performance, basically did not contribute profits, lower than our previous expectations of 1 gross Money performance. Since the acquisition of the Micronized Joint Venture in the fourth quarter of 2011, the company has successively relocated, registered, and rationalized the import and export tariffs of products, which has laid a solid foundation for the recovery of the micronized business in 2013. . 2) Affected by the decline in the growth rate of fixed asset investment, the price of low-grade products in single crystals also declined, affecting part of the company's performance; 3) The company's equity incentive expenses were 10.67 million, affecting nearly 2 cents. In 2013, the cost will be amortized by 7.34 million, and in 2014 it will be 2.66 million. The impact will be gradually reduced.

Looking forward to the company's main business in 2013: 1) Single crystal: The supply capacity of the industry continues to increase, but the three major suppliers are still able to maintain the influence of the middle and high-end grades, and the price of low-grade broken materials has bottomed out. With the gradual commissioning of the company's 1.02 billion carat project, the production of single crystal is expected to increase by 30% in 2013; 2) Micronized powder: After one year of rationalization, the company has significantly strengthened its emphasis on the micronized business, focusing on creating micronized powder to become new. The confidence of growth is very strong. We are also very optimistic about the expansion of the micro-powder business, which is mainly used for precision grinding and functional applications based on its thermal and optical properties, and has a promising future. 3) Wire saw: The photovoltaic industry is still difficult, and the company has suspended the construction progress of the wire saw business. However, due to the obvious signs of improvement in the PV industry and policies, the company will adjust the follow-up product progress according to the market.

In the recent broad market rebound, the company's share price has only increased by 20% from the bottom. As a functional new material company with strong performance elasticity, the stock price is currently in the bottom area.

Investment suggestion: The EPS of 2012-2014 is expected to be 0.25 yuan, 0.33 yuan, 0.42 yuan respectively. The current stock price is 17 times that of 2013 PE, maintaining a strong recommendation rating.

Risk warning: The macroeconomic growth rate fell more than expected.

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