Core view
The "982" project of Henan mending the shortcomings, consolidating and cultivating the advantages of diamond production:
Expansion of leading cultivation diamond projects: in this scheme, there are six pure cultivation diamond production projects with a total investment of about 6.92 billion yuan. This year, it is planned to complete an investment of 2.23 billion yuan, of which the investment of major projects is more than 1 billion yuan. From the disclosed diamond cultivation projects, the investment amount of the main projects is more than 1 billion yuan. The project construction subjects North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) , Sinomach Precision Industry Co.Ltd(002046) , Tianbao Hengxiang, etc. are the top manufacturers and equipment manufacturers in China's diamond cultivation industry chain.
Many enterprises participate in the expansion of industrial diamond production: in this scheme, there are 13 industrial diamond production projects, and the investment amount of a single project is generally less than 1 billion yuan. After all projects are completed, the total industrial diamond production capacity is expected to exceed 5 billion carats / year.
Policy comments:
The concentration of the leading horse racing enclosure is further improved: it can be seen from the list of projects that large and medium-sized projects in diamond production are monopolized by the head production enterprises, and the strong are always strong; The investment enterprises of industrial diamond projects are relatively scattered, and the production capacity of a single project is large. Further verify that the technical barrier of industrial diamond is low and the supply pattern is poor. Cultivating diamonds requires higher requirements for synthetic process, proportion of synthetic block formula and workers' proficiency. The leader has great advantages based on years of technical experience, and there are few potential entrants.
The expansion of production meets the downstream demand, and the C-end penetration rate is expected to accelerate: the expansion of production by upstream manufacturers increases the industry supply, but there is still a gap with the growth rate of downstream demand. After the release of new production capacity, the short-term fine adjustment of drilling blank price will stimulate greater downstream demand, and the C-end permeability is expected to accelerate. The gross profit margin of mainstream production enterprises is expected to remain at a high level and achieve high profit growth.
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 cultivation is mainly based on 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) (301071. SZ), North Industries Group Red Arrow Co.Ltd(000519) (000519. SZ), Henan Huanghe Whirlwind Co.Ltd(600172) (600172. SH) with high market share and good cooperation with upstream equipment manufacturers, and Sinomach Precision Industry Co.Ltd(002046) (002046. SZ) 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.
