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As a dominant industry in Henan, diamond companies have explored different transformation paths and provided samples for the transformation of private enterprises. 
Diamond production began to cut into the consumer realm sharp drop in performance
The transformation and development is becoming a new driving force for Henan diamond manufacturing to seek sustainable growth.
On August 8, Sifangda (300179) announced again that the company is planning a major asset restructuring and plans to purchase the company's downstream diamond products industry related assets. The specific acquisition plan and payment method are being negotiated and communicated. This is a similar announcement issued by Sifangda in the sixth week, and its shares were suspended from the July 4, 2016 due to the planning of major asset restructuring.
Asset restructuring has become an inevitable move for Sifang’s strategic development. The decline in performance is becoming the incentive for Sifangda to seek to expand its development space.
On August 1, Sifangda announced that the company's total operating income in the first half of the year was 638.802 million yuan, a year-on-year decrease of 33.09%; the net profit attributable to ordinary shareholders of listed companies was 8,754,100 yuan, a year-on-year decrease of 60.79%.
The same is the diamond-based Jiangnan Red Arrow (000519). The previous year, the “whale swallowed†the world's largest manufacturer of super-hard materials, Henan Zhongnan Diamond Company, is also experiencing a decline in performance. On July 14, Jiangnan Red Arrow released a performance forecast that the company expects net profit of 29 million yuan to 31 million yuan in the first half of the year, down 78.45% to 79.84%, while the profit for the same period last year was 144 million yuan.
For the reason of the decline in performance, Sifangda gave the reason that, mainly due to fluctuations in international crude oil prices, the sales of oil and gas drilling products of the company decreased year-on-year, resulting in a decline in operating income. Jiangnan Red Arrow believes that the main reason for the decline in the current period is that it is affected by the overall changes in the industry. The gross profit of synthetic diamond sales declined and the profit declined.
“Diamond is a sub-sector, which is also affected by the macroeconomic climate. Leading companies have no circumvention of demand contraction. On the one hand, it reflects the severe market situation, on the other hand, it shows that the ability of enterprises to cope with market changes is declining.†Securities analyst Xiao Yuhang analyzed.
Seeking new ways of growth has become a last resort for diamond companies.
Sifangda's acquisition of downstream industrial chain enterprises and the creation of an integrated industrial chain production model are a way to resist market risks. Two years ago, the reorganization of diamond assets implemented by Jiangnan Red Arrow failed to achieve the high-speed and sustained growth of its performance, and it was on the way to seek new growth breakthroughs.
On June 27, Jiangnan Hongjian received the approval of the State-owned Assets Supervision and Administration Commission of the State Council from the China National Weapons Industry Group Corporation, the controlling shareholder. The State-owned Assets Supervision and Administration Commission of the State Council agreed in principle to the Jiangnan Red Arrow Asset Restructuring and the supporting financing plan, and spent 2.412 billion yuan to acquire the controlling shareholder. The military assets of six companies under the West Industrial Group. Returning to the main business of military industry, it has become the strategic thinking of red arrow redemption in Jiangnan.
Transformation path
However, it is also a diamond company, and individual companies have found their way on the transition path.
This can be seen from the performance of the semi-annual report. As early as July 18, Yu Diamond (300064) announced the first half of the year's performance forecast: the first half of the year realized a profit of 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. At the same time, the second quarter continued the glory of the first quarter.
On August 9th, the interim report released by Huanghe Cyclone showed that the company achieved operating income of 1.157 billion yuan from January to June 2016, an increase of 36.57% over the same period of last year. The company's operating income increased by 18.21% from the previous quarter; the net attributable to shareholders of listed companies The profit was 182 million yuan, a year-on-year increase of 72.67%. Compared with the average operating income growth rate of -2.14% in the general equipment industry, the average net profit growth rate is 0.74%. The excellence of its performance is obvious.
In this regard, the reporter contacted Guo Liuxi, chairman of Yu Diamond, who declined the interview on the grounds of business trip. However, people close to Yu Diamond told reporters that Yu Diamond achieved good business performance and was related to the company's transformation and development in the early two years. Yu Diamond, which was listed on the GEM in 2010, is mainly engaged in the research and development, production and sales of synthetic diamond and its raw and auxiliary materials, as well as the development of synthetic diamond equipment. In the year of listing, the net profit was 75.98 million yuan, an increase of 44.8% over the previous year. The profit for the following year reached a new high, reaching 140 million yuan, an increase of 86.4%.
However, subject to factors such as the decline in product gross margin, fierce market competition and macroeconomic downturn, Yu Diamond's profit has declined since 2012 and reached its peak in 2014. In the same year, it only achieved a net profit of 61.3 million yuan, a decrease from the previous year. 34.9%.
To this end, in 2014, Yu Diamond began to transform from the industrial sector to the consumer sector. “It is imperative for the company to adjust its product mix and broaden its industrial chain. Traditional industrial products are in a downturn, and it is necessary to find new profit growth points in the consumer goods sector.â€
The Industrial Securities Research Report shows that Yu Diamond's six-face press is mainly used to produce traditional industrial diamonds. This year, it began to be used to produce synthetic diamonds. The artificial diamonds belong to the light luxury field and mainly serve as decorative effects. To the extent that it replaces natural diamonds, prices and gross margins are high. Product structure optimization and capacity release made the company's performance and revenue in the first half of the year soar.
The release of the Yellow River whirlwind also benefited from the transformation. In 2015, the company entered the field of industrial intelligence and acquired the leading intelligent manufacturing implementer in China. In the first quarter, Mingshi Intelligent achieved a revenue of about 110 million yuan and a net profit of 42 million yuan, contributing nearly 40% of the company's first quarter results. Obviously, its transformation has taken the path of initial success.
The dual pressure of transformation
Of course, it is not that Sifangda and Jiangnan Red Arrow sit on the decline in performance and do nothing. In fact, they are also working hard on the transition road, but the results have not been revealed.
The reporter noted that Sifangda is steadily advancing fundraising projects and promoting the continuous development of product structure. At present, the investment progress of the company's PCD/PCBN composite sheet industrialization project for metal cutting has been completed 98.75%, and the polycrystalline diamond composite sheet (PDC) pick and drill bit industrialization project has completed 51% of the investment progress. A new product that fills the gaps in the domestic and international markets, but has not yet contributed to the company's profit.
Jiangnan Red Arrow announced on July 11 that the “Direct Conversion Method for Synthesizing Large-Scale Polycrystalline Diamond Project†declared by the subsidiary Zhongnan Diamond Co., Ltd. passed the appraisal of scientific and technological achievements in Henan Province. The project has filled the domestic gap, the overall technology has reached the international advanced level, and has reached the international leading level in terms of grain size and color regulation.
Securities analyst Xiao Yuhang believes that the high-end transformation of products faces great uncertainty. “There are two major uncertainties before the marketization of products, including technical uncertainty and market uncertainty.â€
Yu Diamond began to expand its product line in the consumer goods sector in 2014, but it will break through the technical bottleneck by 2015.
For example, the problem encountered in the transformation of Yu Diamond. “Before, because of the lack of technology, synthetic diamonds can only be made into powders, and they cannot be made into large particles, so they cannot produce products for the consumer sector. After the technological breakthrough, the products will achieve granular production and have the opportunity to intervene in the consumer market.†The above is close to the introduction of Henan diamonds. "At present, the gross profit rate of industrial products produced by the company is about 30%, and the gross profit rate of diamond large single crystals that can be used as consumer goods can reach more than 60% and double."
Whether it is Sifangda or Jiangnan Red Arrow, they are currently shifting to the high-end of products to overcome the two major problems of technology and market.
For example, Sifangda, although the progress of the investment project is good, but the market problem still needs to be resolved. “After the new products are put on the market, there is a short period of market break-in. It is not realistic to release the results on a large scale.â€
Xiao Yuhang believes that for Jiangnan Red Arrow, a new project will not be a bowl of soup if it is to be produced in the market. The technical difficulty of this is a roadblock. After all, a scientific and technological achievements project has gone through technical appraisal and has a long way to go from production.
Transformation takes root in "one acre and three points"
Not long ago, the reporter participated in a private economic transformation forum. The founder of the Sanquan Group, Chen Zemin, bluntly said: In the face of the current market environment, enterprises seeking to transform is like climbing a “volcanoâ€, not transforming “waiting for deathâ€, and immediately transforming may “ It will die immediately, and it shows the hardship of enterprise transformation.
Cases of suffering in transition are happening. The reporter noted that some media have reported the transformation of Linzhou Heavy Machinery, which is still struggling on the road to transformation. As a large private coal mining machinery and equipment supplier in China, Linzhou Heavy Machinery Co., Ltd. will set the transformation direction for intelligent robots and coalbed methane development in 2014. After one and a half years, the CBM development business will be aborted and will soon be worth hundreds of millions of funds. Into the factoring industry; in 2015, Linzhou Heavy Machinery had a loss of nearly 200 million yuan in the whole year, and successively launched four investment projects for transformation, but until now, it is difficult to say that the transformation was successful.
Transformation, especially in the unfamiliar areas, companies not only face market risks, but also many risks such as technology, talent and capital.
However, in the process of economic development, overcapacity occurs, and enterprises must transform and upgrade for development. This is related to the sustainable and healthy development of enterprises.
"If we say that 'double creation' is from 0 to 1, then the transformation and upgrading should be from 1 to N, that is, replication and improvement. The transformation solves the problem of enterprise growth and continuous growth. Two key points are technology leadership and capital leadership.†Xiao Yuhang believes.
In the process of transformation and development, private enterprises can not only focus on technological breakthroughs, but also make a difference in the capital field, that is, "use their own capital leverage to achieve transformation." Among them, there is also an entrepreneurial problem, that is, whether entrepreneurs have the heart to achieve the integration of capital and resources. Feng Dexian, director of the Institute of Geography of the Henan Academy of Sciences, thinks about the transformation.
In this regard, Chen Zemin adheres to his own transformational cognition. “Although it is difficult, private enterprises must walk in the fields they are familiar with, and cannot blindly transform. They must have the spirit of craftsmanship, focus on their own industry, and be the expert brand of the industry.â€
This may provide a new direction for the transformation of diamonds and enterprises.
Diamond production began to cut into the consumer realm sharp drop in performance
The transformation and development is becoming a new driving force for Henan diamond manufacturing to seek sustainable growth.
On August 8, Sifangda (300179) announced again that the company is planning a major asset restructuring and plans to purchase the company's downstream diamond products industry related assets. The specific acquisition plan and payment method are being negotiated and communicated. This is a similar announcement issued by Sifangda in the sixth week, and its shares were suspended from the July 4, 2016 due to the planning of major asset restructuring.
Asset restructuring has become an inevitable move for Sifang’s strategic development. The decline in performance is becoming the incentive for Sifangda to seek to expand its development space.
On August 1, Sifangda announced that the company's total operating income in the first half of the year was 638.802 million yuan, a year-on-year decrease of 33.09%; the net profit attributable to ordinary shareholders of listed companies was 8,754,100 yuan, a year-on-year decrease of 60.79%.
The same is the diamond-based Jiangnan Red Arrow (000519). The previous year, the “whale swallowed†the world's largest manufacturer of super-hard materials, Henan Zhongnan Diamond Company, is also experiencing a decline in performance. On July 14, Jiangnan Red Arrow released a performance forecast that the company expects net profit of 29 million yuan to 31 million yuan in the first half of the year, down 78.45% to 79.84%, while the profit for the same period last year was 144 million yuan.
For the reason of the decline in performance, Sifangda gave the reason that, mainly due to fluctuations in international crude oil prices, the sales of oil and gas drilling products of the company decreased year-on-year, resulting in a decline in operating income. Jiangnan Red Arrow believes that the main reason for the decline in the current period is that it is affected by the overall changes in the industry. The gross profit of synthetic diamond sales declined and the profit declined.
“Diamond is a sub-sector, which is also affected by the macroeconomic climate. Leading companies have no circumvention of demand contraction. On the one hand, it reflects the severe market situation, on the other hand, it shows that the ability of enterprises to cope with market changes is declining.†Securities analyst Xiao Yuhang analyzed.
Seeking new ways of growth has become a last resort for diamond companies.
Sifangda's acquisition of downstream industrial chain enterprises and the creation of an integrated industrial chain production model are a way to resist market risks. Two years ago, the reorganization of diamond assets implemented by Jiangnan Red Arrow failed to achieve the high-speed and sustained growth of its performance, and it was on the way to seek new growth breakthroughs.
On June 27, Jiangnan Hongjian received the approval of the State-owned Assets Supervision and Administration Commission of the State Council from the China National Weapons Industry Group Corporation, the controlling shareholder. The State-owned Assets Supervision and Administration Commission of the State Council agreed in principle to the Jiangnan Red Arrow Asset Restructuring and the supporting financing plan, and spent 2.412 billion yuan to acquire the controlling shareholder. The military assets of six companies under the West Industrial Group. Returning to the main business of military industry, it has become the strategic thinking of red arrow redemption in Jiangnan.
Transformation path
However, it is also a diamond company, and individual companies have found their way on the transition path.
This can be seen from the performance of the semi-annual report. As early as July 18, Yu Diamond (300064) announced the first half of the year's performance forecast: the first half of the year realized a profit of 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. At the same time, the second quarter continued the glory of the first quarter.
On August 9th, the interim report released by Huanghe Cyclone showed that the company achieved operating income of 1.157 billion yuan from January to June 2016, an increase of 36.57% over the same period of last year. The company's operating income increased by 18.21% from the previous quarter; the net attributable to shareholders of listed companies The profit was 182 million yuan, a year-on-year increase of 72.67%. Compared with the average operating income growth rate of -2.14% in the general equipment industry, the average net profit growth rate is 0.74%. The excellence of its performance is obvious.
In this regard, the reporter contacted Guo Liuxi, chairman of Yu Diamond, who declined the interview on the grounds of business trip. However, people close to Yu Diamond told reporters that Yu Diamond achieved good business performance and was related to the company's transformation and development in the early two years. Yu Diamond, which was listed on the GEM in 2010, is mainly engaged in the research and development, production and sales of synthetic diamond and its raw and auxiliary materials, as well as the development of synthetic diamond equipment. In the year of listing, the net profit was 75.98 million yuan, an increase of 44.8% over the previous year. The profit for the following year reached a new high, reaching 140 million yuan, an increase of 86.4%.
However, subject to factors such as the decline in product gross margin, fierce market competition and macroeconomic downturn, Yu Diamond's profit has declined since 2012 and reached its peak in 2014. In the same year, it only achieved a net profit of 61.3 million yuan, a decrease from the previous year. 34.9%.
To this end, in 2014, Yu Diamond began to transform from the industrial sector to the consumer sector. “It is imperative for the company to adjust its product mix and broaden its industrial chain. Traditional industrial products are in a downturn, and it is necessary to find new profit growth points in the consumer goods sector.â€
The Industrial Securities Research Report shows that Yu Diamond's six-face press is mainly used to produce traditional industrial diamonds. This year, it began to be used to produce synthetic diamonds. The artificial diamonds belong to the light luxury field and mainly serve as decorative effects. To the extent that it replaces natural diamonds, prices and gross margins are high. Product structure optimization and capacity release made the company's performance and revenue in the first half of the year soar.
The release of the Yellow River whirlwind also benefited from the transformation. In 2015, the company entered the field of industrial intelligence and acquired the leading intelligent manufacturing implementer in China. In the first quarter, Mingshi Intelligent achieved a revenue of about 110 million yuan and a net profit of 42 million yuan, contributing nearly 40% of the company's first quarter results. Obviously, its transformation has taken the path of initial success.
The dual pressure of transformation
Of course, it is not that Sifangda and Jiangnan Red Arrow sit on the decline in performance and do nothing. In fact, they are also working hard on the transition road, but the results have not been revealed.
The reporter noted that Sifangda is steadily advancing fundraising projects and promoting the continuous development of product structure. At present, the investment progress of the company's PCD/PCBN composite sheet industrialization project for metal cutting has been completed 98.75%, and the polycrystalline diamond composite sheet (PDC) pick and drill bit industrialization project has completed 51% of the investment progress. A new product that fills the gaps in the domestic and international markets, but has not yet contributed to the company's profit.
Jiangnan Red Arrow announced on July 11 that the “Direct Conversion Method for Synthesizing Large-Scale Polycrystalline Diamond Project†declared by the subsidiary Zhongnan Diamond Co., Ltd. passed the appraisal of scientific and technological achievements in Henan Province. The project has filled the domestic gap, the overall technology has reached the international advanced level, and has reached the international leading level in terms of grain size and color regulation.
Securities analyst Xiao Yuhang believes that the high-end transformation of products faces great uncertainty. “There are two major uncertainties before the marketization of products, including technical uncertainty and market uncertainty.â€
Yu Diamond began to expand its product line in the consumer goods sector in 2014, but it will break through the technical bottleneck by 2015.
For example, the problem encountered in the transformation of Yu Diamond. “Before, because of the lack of technology, synthetic diamonds can only be made into powders, and they cannot be made into large particles, so they cannot produce products for the consumer sector. After the technological breakthrough, the products will achieve granular production and have the opportunity to intervene in the consumer market.†The above is close to the introduction of Henan diamonds. "At present, the gross profit rate of industrial products produced by the company is about 30%, and the gross profit rate of diamond large single crystals that can be used as consumer goods can reach more than 60% and double."
Whether it is Sifangda or Jiangnan Red Arrow, they are currently shifting to the high-end of products to overcome the two major problems of technology and market.
For example, Sifangda, although the progress of the investment project is good, but the market problem still needs to be resolved. “After the new products are put on the market, there is a short period of market break-in. It is not realistic to release the results on a large scale.â€
Xiao Yuhang believes that for Jiangnan Red Arrow, a new project will not be a bowl of soup if it is to be produced in the market. The technical difficulty of this is a roadblock. After all, a scientific and technological achievements project has gone through technical appraisal and has a long way to go from production.
Transformation takes root in "one acre and three points"
Not long ago, the reporter participated in a private economic transformation forum. The founder of the Sanquan Group, Chen Zemin, bluntly said: In the face of the current market environment, enterprises seeking to transform is like climbing a “volcanoâ€, not transforming “waiting for deathâ€, and immediately transforming may “ It will die immediately, and it shows the hardship of enterprise transformation.
Cases of suffering in transition are happening. The reporter noted that some media have reported the transformation of Linzhou Heavy Machinery, which is still struggling on the road to transformation. As a large private coal mining machinery and equipment supplier in China, Linzhou Heavy Machinery Co., Ltd. will set the transformation direction for intelligent robots and coalbed methane development in 2014. After one and a half years, the CBM development business will be aborted and will soon be worth hundreds of millions of funds. Into the factoring industry; in 2015, Linzhou Heavy Machinery had a loss of nearly 200 million yuan in the whole year, and successively launched four investment projects for transformation, but until now, it is difficult to say that the transformation was successful.
Transformation, especially in the unfamiliar areas, companies not only face market risks, but also many risks such as technology, talent and capital.
However, in the process of economic development, overcapacity occurs, and enterprises must transform and upgrade for development. This is related to the sustainable and healthy development of enterprises.
"If we say that 'double creation' is from 0 to 1, then the transformation and upgrading should be from 1 to N, that is, replication and improvement. The transformation solves the problem of enterprise growth and continuous growth. Two key points are technology leadership and capital leadership.†Xiao Yuhang believes.
In the process of transformation and development, private enterprises can not only focus on technological breakthroughs, but also make a difference in the capital field, that is, "use their own capital leverage to achieve transformation." Among them, there is also an entrepreneurial problem, that is, whether entrepreneurs have the heart to achieve the integration of capital and resources. Feng Dexian, director of the Institute of Geography of the Henan Academy of Sciences, thinks about the transformation.
In this regard, Chen Zemin adheres to his own transformational cognition. “Although it is difficult, private enterprises must walk in the fields they are familiar with, and cannot blindly transform. They must have the spirit of craftsmanship, focus on their own industry, and be the expert brand of the industry.â€
This may provide a new direction for the transformation of diamonds and enterprises.
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