Core view
The price of natural diamonds continued to rise, with Zhongda carat products leading the increase
According to IDEX (international diamond trading platform), the total price index of finished diamonds rose by 26.46% from January 1, 2021 to March 2, 2022. According to different carat numbers, the price indexes of finished diamonds of 0.50-0.69, 1.50-1.99 and 4.00-4.99 carats increased by 10.34%, 33.84% and 21.38% respectively.
In the long run, the price trend of diamonds is highly related to the price of gold. Zhongda carat finished diamond has higher rarity, highly concentrated value and good liquidity, value preservation and anti inflation. Since the outbreak, the price of gold, as an important safe haven asset, has remained high. The price of natural diamonds decreased due to the sharp decline in demand at the beginning of the epidemic. As the marginal impact of the epidemic weakened, central banks vigorously pursued economic stimulus policies, and the recovery of consumption combined with the demand for asset allocation boosted the rise of the price center of natural diamonds.
Asset allocation demand pushes up the price of natural drilling
Under the background of inflation, residents’ demands for asset preservation have increased rapidly. Natural diamonds have their own rare attributes, large single value, and the unit value increases synchronously with the increase of carat number. The investment attribute is becoming more and more important. Taking the round drill (d color, if) as an example, the unit price of 10 carat natural drill is about US $181000 / carat, and the unit price of 0.5 carat is only US $7000 / carat.
Medium and large carat diamonds are light and easy to preserve. They have become an important option for the asset allocation of the rich class. With the same 15 million yuan fund, you can buy about 37kg of gold, but only 13 carat natural round diamonds (d color, if). The rising consumer demand for Zhongda carat diamonds has boosted the continuous rise in prices.
Investment suggestions:
The supply of natural drilling is limited, but the downstream consumer demand is strong, and the price is expected to remain high. At present, the penetration rate of cultivated diamonds in the world is only 4%. After the price difference between cultivated diamonds and natural diamonds is expanded, the cost performance advantage is highlighted, and the downstream demand is expected to be further improved. At the same time, the gap between natural supply and demand will create space for improving the penetration rate of cultivated diamond, and the urban middle class is expected to accelerate the shift to cultivated diamond consumption. It is suggested to focus on two investment routes:
1) production side: China supplies 40% + cultivated diamond blanks in the world, and Cr4 is as high as 80%. The rise of downstream demand will bring performance growth to the leader. 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) ;
2) equipment side: the investment demand for high gross profit driven equipment at the production side has increased, and the expansion of diamond cultivation in Henan “982” project has begun to take shape. It is suggested to pay attention to the supply of HPHT synthesis equipment and lay out the Sinomach Precision Industry Co.Ltd(002046) .
Risk tip: industry competition intensifies, downstream demand is less than expected, and the supply of natural diamonds increases.
