Core view
Tracking the rise and fall of the sector: this week, the Shanghai Composite Index rose 0.80%, the Shenzhen Component Index rose 1.78%, and the gem index rose 2.93%. The A-share diamond sector rose 7.69%, Chow Tai Fook, the subject of Hong Kong stocks, rose 5.05%, and brilliant earth, the subject of US stocks, fell 5.37%.
Industry data tracking:
Import and export data of cultivated diamonds in India: in January 2022, the import volume of cultivated diamond blanks in India was US $153 million, a year-on-year increase of 77.86%, and the export volume of cultivated diamond bare diamonds was US $122 million, a year-on-year increase of 69.09%; India’s import of natural diamond rough was US $1.214 billion, a year-on-year decrease of 3.38%, and the export of natural diamond bare diamonds was US $2.05 billion, a year-on-year increase of 13.60%.
Penetration rate of cultivated diamonds: in January 2022, the penetration rate of imported cultivated diamonds in India was 11.21%, with a year-on-year increase of + 4.79 PCT; The permeability at the outlet end was 5.62%, with a year-on-year increase of + 1.77pct.
Cultivating diamond industry chain: led by China, India and the United States.
This week, we released an in-depth report on the industry “cultivating diamond manufacturers in China: benefiting from the rise of global C-end”, which combed the industrial chain structure, value chain transmission and supply and demand distribution of global diamond cultivation. In 2020, China produced 40% of the global + cultivated diamonds, of which 70-80% eventually went to the US market; India has polished 90% of the world’s diamonds; The United States consumes 80% of the world’s cultivated diamonds, of which 30-40% can be traced back to China. It is expected that the United States will remain the main consumer market for a long time, and its penetration improvement will be the main increment of diamond consumption in the future. As the world’s largest supply market for cultivated diamond blanks, China’s top four enterprises North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) , Henan Liliang Diamond Co.Ltd(301071) and Zhengzhou Huajing account for about 80%, which will significantly benefit from the rise of global C-end.
Industry hot spots: the value of diamonds imported through Shanghai Diamond Exchange in 2021 was 33.327 billion yuan, a year-on-year increase of 76.11%, a record high.
Investment suggestion: at present, the C-end penetration rate of the global cultivation diamond market is only 4%, and the high cost performance advantage drives the rapid growth of downstream demand. Chinese manufacturers supply 40% of the world’s cultivated diamond blanks, which will significantly benefit from the rise of downstream demand. China’s diamond production is mainly cultivated by high temperature and high pressure method. Due to the capacity constraints of upstream equipment manufacturers, the expansion of the industry is limited. It is suggested to pay attention to Henan Liliang Diamond Co.Ltd(301071) , North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) with high market share and good cooperation with upstream equipment manufacturers, and Sinomach Precision Industry Co.Ltd(002046) with two technical paths of HPHT / CVD at the same time.
Risk tip: the downstream demand is less than expected, the production capacity is less than expected, and the industry competition is intensified.
