Since 2020, diamond cultivation has developed rapidly, the penetration rate has increased rapidly, the industry has continued to grow rapidly, and the market space is broad. Through the disassembly of 12 core questions, we will answer some important actual situations of the diamond industry, including supply and demand, technical barriers, production capacity, process barriers, industrial chain value distribution, core competitiveness and price trend, so as to interpret the current situation and future development trend of the industry. The 12 questions are: 1 Industry origin | why does diamond cultivation develop rapidly from 2020 to 2021? 2. Price situation | the difference and future pattern between cultivated diamonds and natural diamonds? 3. Value chain separation | how are the profits distributed in the value chain? 4. Market analysis – how big is the diamond market? How fast is it growing? 5. Demand analysis | what is the industry stage of diamond cultivation now? 6. Technical path | comparison of advantages and disadvantages between CVD and high temperature and high pressure technical path? 7. What is the per unit yield of HPHT? 8. Equipment supply | how about the supply of high temperature and high pressure and CVD upstream equipment? 9. Concept clarification is the concept of “yield” meaningful? 10. Price increase operation | what is the process of “price increase” of upstream manufacturers? What is the future price trend? 11. Core – supply analysis – how about upstream process barriers? Will it face the price impact brought by the substantial expansion of production? 12. Terminal price | will the terminal reduce the price? What is the development path of the brand?
Demand: cultivated diamonds are still in the stage of rapid increase in penetration. At present, the United States and other places have become a certain scale. On the other hand, the Chinese market is still in the early stage of cognition. Cultivated diamonds themselves are exactly the same as natural diamonds. At the same price, the purity, chromaticity and carat number of cultivated diamonds are significantly better than natural diamonds. The Chinese market is still in the early stage of development, and it is expected to form a more systematic price cognition through brand output in the future.
Barriers: 1) equipment barriers: the supply of high-temperature and high-pressure upstream press is limited. The overall scale of Chinese enterprises responsible for CVD diamond production and cultivation is still relatively limited, and the planned production capacity remains to be tested. 2) Process barriers: upstream process barriers are barriers to a complete production process, including equipment, site, process, technical parameters, management team mechanism, etc.
Production capacity: the production capacity of high-grade diamonds is scarce. At this stage, various manufacturers produce medium and high-grade cultivated diamonds The proportion of (d color, vs grade, etc.) is still quite different, and even the proportion of high-grade products in different batches of products of the same manufacturer is quite different. The selling price of high-grade products is also quite different. The supply of high-grade diamonds is in short supply, and the core profit mainly comes from high-grade large-scale diamond rings. If it is difficult for new production capacity to achieve stable and large-scale production of high-grade diamonds in a short time The level of large carat diamond ring can not directly compete with the existing production capacity. For example, India’s CVD expansion of production capacity, if the stable production of high-grade diamonds can not be realized, it can not directly compete with China’s production capacity.
Price: market-oriented pricing in the end consumer market, and the average ex factory price of upstream manufacturers is still “improving”. 1) Terminal price: at this stage, terminal price is market pricing (standard 4C pricing system), not cost pricing. In the medium and long term, brand is needed to continue to improve the terminal pricing system. 2) upstream ex factory price: upstream manufacturers “raise prices” In essence, on the basis of process improvement, the increase in the proportion of high-grade diamonds in one furnace of rough produced at a time will lead to the increase in the average price, while the price of rough diamonds of the same product is stable. In the future, with the improvement of process, diamond producers will continue to welcome “price increase”.
Investment suggestion: the penetration rate of diamond cultivation industry is still in rapid improvement, upstream manufacturers still have certain barriers, the process is still improving, and high-quality production capacity is in short supply. It is recommended that Henan Liliang Diamond Co.Ltd(301071) and North Industries Group Red Arrow Co.Ltd(000519) and Henan Huanghe Whirlwind Co.Ltd(600172) be paid attention to in the relevant standards of high temperature and high pressure method. It is suggested to pay attention to Sinomach Precision Industry Co.Ltd(002046) , Beijing Worldia Diamond Tools Co.Ltd(688028) and Sf Diamond Co.Ltd(300179) in the related subjects of CVD method.
Risk tip: the expanded capacity is less than expected, the market competition intensifies the risk, R & D risk, etc
