In 2021, diamond cultivation ushered in an “outbreak year”. Driven by strong market demand, the performance of Henan Liliang Diamond Co.Ltd(301071) ( Henan Liliang Diamond Co.Ltd(301071) . SZ) in 2021 increased by more than twice year-on-year. The financial Associated Press reporter learned from the insiders that recently, the rough below 2 carats has increased greatly, and the supply and demand of cultivated diamonds are unbalanced. In 2022, the supply of cultivated diamonds will continue to be in short supply.
Henan Liliang Diamond Co.Ltd(301071) annual report shows that in 2021, the operating income was 498 million yuan, and the net profit attributable to the parent company was 240 million yuan, with a year-on-year increase of 228.17%. The cash flow is consistent with the overall performance growth of the company. The net cash flow from operating activities in 2021 was 288 million yuan, with a year-on-year increase of 187.47%.
In terms of products, driven by the strong demand in the downstream, the volume and price of Henan Liliang Diamond Co.Ltd(301071) cultivated diamond products increased at the same time, and the product revenue increased to 197 million yuan from 37.34 million yuan last year, accounting for nearly 40% of the operating revenue, with a gross profit of 81.38%, an increase of 14.55% over the same period last year.
In 2022, due to the influence of market supply and demand, the price of cultivated diamonds rose again. Liu Yangyang, a senior person in the industry, told the financial associated press that the recent price rise of finished bare diamonds is mainly below 2 carats, especially the price rise of finished products with 50-90 points is the highest, and the price of more than 2 carats has basically not changed much. He further explained: “the main reasons for this price increase are: first, the rising cost of raw materials, and second, the strong demand for 50-90 finished products, which are in short supply.”
Cultivated diamonds still maintain a high outlook in the global consumer market. In January 2022, the import and export of cultivated diamonds in India continued to grow rapidly. According to the monthly data disclosed by GJEPC, India’s imports of cultivated diamond blanks in January were US $153 million, a year-on-year increase of 77.3%, a month on month increase of 16.2%, and exports were US $122 million, a year-on-year increase of 70% and a month on month increase of 18.1% Henan Liliang Diamond Co.Ltd(301071) annual report data also confirmed that the upstream of the industry is in the “seller’s market”, its net cash flow from operating activities accounted for 95.55% of the total profit, the turnover days of accounts receivable was 43.71 days, a significant decrease over the previous year, and the advance payment for goods increased by 2.5 times over the previous year.
For the prospect of cultivating diamonds in 2022, a number of brokerage research reports and insiders expressed optimism. Liu Yangyang revealed that there is still room for price increase in the future. At present, the supply and demand are unbalanced, and the transfer activities in the industry between 50 and 90 points are still frequent. In his opinion, the diamond cultivation industry may continue to be in short supply in 2022.
Henan Liliang Diamond Co.Ltd(301071) said in the annual report: “Cultivating diamond business will be an important development direction of the company in the future. Next, the company will further expand the proportion of the overall revenue of cultivating diamond products. In 2022, the company will focus on completing the construction of new plant area, ensuring the full completion of Baojing raised investment project and the rapid production of phase II construction project, so as to rapidly expand the scale of production capacity and meet the strong demand of the market for cultivating diamond and other products.” The financial Associated Press reporter noted that the equipment prepayment of Henan Liliang Diamond Co.Ltd(301071) 2021 was 28.28 million yuan, an increase of more than 35 times over the same period.
