Yu Diamond: Diamond prices will continue to rise slightly

The company's current situation: We learned that the value of synthetic diamond products has increased slightly, raising the possibility of a profit increase. Recently, the price of Zhongnan diamonds is the most aggressive. Some products have reached 10-20%, while the Yellow River cyclone has not yet raised prices. However, in view of the fact that the Yellow River cyclone has always had the highest average selling price, it is currently approaching by other companies and has the power of price adjustment. We expect a slight increase in the price of diamond products. At present, the company's annual production capacity of synthetic diamond has reached 1 billion carats, and the annual production may reach 1.2 billion carats/year, slightly higher than our expectation. At present, the production and sales rate is close to 100%, and the expected prosperity will continue. The gross profit margin in the second quarter is slightly higher than that in the first quarter. The main reason for the strong demand is the dual effect of downstream replacement of traditional abrasives and substitution of imports: The downstream of synthetic diamonds can be mainly divided into terminal products and intermediate products. At present, the application of main terminal saw blades, grinding blocks, drill bits, etc. has been cut into ceramics, medical tools and other new fields from the past, while intermediate products are also in strong demand due to the replacement of cemented carbide with PCD. . The overseas production capacity of diamonds, diamond end products and intermediate products is decreasing, mainly because the cost is too high to compete with Chinese enterprises, and only high-end products, so the effective demand of local enterprises is more vigorous. The diamond wire project is progressing smoothly. At present, the equipment is in place, the debugging is smooth, and the trial is being discussed with potential customers. It is expected to start trials from June to July. At present, leading companies such as Poly GCL in the industry believe that silicon ingot cutting has no problem. The single crystal silicon wafer is being tested. Wuxi Suntech has already started testing polycrystalline silicon wafer cutting, but the diamond wires used at present are imported. The price of imported diamond wire is relatively expensive. For example, the unit price of imported diamonds in Japan can reach 2-3 yuan/meter. It is expected that the price of Henan diamond products will be much lower than this level and will maintain high gross profit margin. Therefore, as long as its quality is passed, diamond wafer cutting is recognized by customers. Yu Valuation and recommendation: Maintain the profit forecast of 0.50, 0.75 yuan/share in 2011-2012, up 100% and 50% year-on-year. The current stock price corresponds to 36 times P/E ratio in 2011, and there has not been a rise in the current round of diamond price increase due to the small non-lifting of the ban. Based on product prices and sales may exceed expectations, we will continue to measure the possibility of a profit increase. Diamond diamond wire business will lead to an outbreak. We predict that the business will contribute 3 million yuan and 80 million yuan respectively in 2011 and 2012.  

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