Main points:
In January 22, the import and export data of India's cultivated drill were bright, and the demand boom was continuously verified.
Event: GJEPC released the import and export data of India's cultivated drill in January, with the import volume of US $153 million, a year-on-year / month on month increase of 77.9% / 15.9%, the import of US $132 million last month, a year-on-year / month on month increase of 106.3% / 55.3%, and the import category penetration rate in January was 11.2%. Affected by the reduction of natural drill imports, it reached a new high in recent three years; In January, the export was US $122 million, with a year-on-year / month on month increase of 69.0% / 18.4%. Last month, the export was US $103 million, with a year-on-year / month on month increase of 64.4% / 19.8%. The export penetration of 5.6% in January was the peak in recent three years, and the demand boom continued to be verified.
The data in January continued to verify that the industry is subject to supply constraints, and China's new production capacity is expected to increase in 22 years.
The market is worried about the overcapacity caused by the expansion of CVD production in India. In January, the import of cultivated diamonds in India was 25.4% higher than that of exports (28.2% higher in December 2021), which further verified that the current growth rate of the industry is restricted by supply. 7. China's exports fell by about 33.8% in August compared with that of India in August, dragging down China's imports by about 23.9% in August. Then, as the impact of the flood subsided, the import showed a synchronous recovery trend month on month. On the production side, Chinese diamond manufacturers have plans to increase production capacity, which is expected to continue in 2022. North Industries Group Red Arrow Co.Ltd(000519) it is estimated that 120000 carats of gem grade cultivated diamond production line equipment will be put into operation in 2022, and the production capacity of large carat cultivated diamond is expected to continue to increase; Henan Huanghe Whirlwind Co.Ltd(600172) the project with an annual output of 5 million carats is under construction, and 300 presses are added outside the system through government enterprise cooperation projects Jifeng and xudriller; Henan Liliang Diamond Co.Ltd(301071) it is expected to complete the construction of intelligent chemical plant project and purchase 320 presses in 2022.
The low inventory of natural diamonds may accelerate the penetration of cultivated diamonds, and the strong demand drives the overall price rise of diamonds. According to Bain data, the global output of rough diamonds in 2021 was 116 million carats, an increase of 5% over the same period, but there is still a gap compared with 139 million carats in 2019. After the epidemic, the demand for diamonds and jewelry has rebounded in "V". At present, the output of natural diamonds is difficult to meet the strong demand in the downstream. In 2021, the diamond inventory was 29 million carats, the lowest point in nine years. When the supply of natural diamonds is in short supply, cultivated diamonds are expected to accelerate the penetration. In terms of price, diamond prices rose in 2021, with the prices of rough diamonds and polished diamonds rising by 21% and 9% respectively, which also confirmed the booming demand of the diamond industry.
Cultivate the star sea of diamond market, and there is about 7 times the stock substitution space for a long time. Printed in 2021
The import volume of cultivated diamonds is US $1.13 billion (about 7.17 billion yuan). Assuming that the import unit price under the trend of big drilling and good drilling is 500 yuan / carat, according to the estimation that the net import volume of Indian rough diamonds accounts for 95% of the world, the global output of cultivated rough diamonds is about 14.34 million carats, yoy + 99.2%. In terms of growth space, if we do not consider the increment of self pleasing and the increment of marriage and love in the low-line market, under the situation of 30% person time penetration & 0.4 carat per capita consumption of natural diamonds, the alternative space for cultivating the stock of diamonds is expected to reach 99.9 million carats, with about seven times the growth space. (see the report cultivating diamonds: is there overcapacity?)
Investment advice
India's import and export data continue to verify the prosperity of demand, and the current industry growth may be restricted by supply. The inventory of natural diamonds will remain low or the penetration of cultivated diamonds will be accelerated, and the new capacity of Chinese manufacturers is expected to continue to increase in 2022. It is suggested that diamond manufacturers Henan Liliang Diamond Co.Ltd(301071) , North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) should be cultivated by paying attention to the breakthrough of dakla process and the stable release of performance brought by new production capacity.
Risk tips
Macroeconomic growth is less than expected, resulting in the decline of residents' purchasing power; The intensified competition in the cultivation diamond industry led to price fluctuations, and the increase of industry penetration was less than expected
