Investment advice
The conflict between Russia and Ukraine has disturbed the supply of natural diamonds, and the price of finished diamonds has risen sharply, while the global demand for diamonds is still strong. Natural diamond traders may turn to cultivating diamonds, cultivating diamonds or accelerating penetration; From January to February, the sales of diamond accessories cultivated by Amoy in China increased by 218.6% at the same time. It is suggested to pay attention to the global leader in high-quality HTHP production Henan Liliang Diamond Co.Ltd(301071) / North Industries Group Red Arrow Co.Ltd(000519) / Henan Huanghe Whirlwind Co.Ltd(600172) , and actively lay out jewelry brands to cultivate diamonds in the downstream.
Market Review
In the past half month (2022.2.20 ~ 2022.3.8), the Shanghai Composite Index, Shenzhen Component Index and Shanghai and Shenzhen 300 fell 5.65%, 9.03% and 8.30% respectively, and the cultivation diamond sector fell 2.35%, outperforming Shanghai and Shenzhen Shandong Longertek Technology Co.Ltd(300594) pct. In terms of sector comparison, diamond cultivation is at the forefront. St King Kong, Henan Liliang Diamond Co.Ltd(301071) , Sf Diamond Co.Ltd(300179) led the increase; Chow Tai Fook, North Industries Group Red Arrow Co.Ltd(000519) , Beijing Worldia Diamond Tools Co.Ltd(688028) led the decline.
Data tracking:
Demand recovered + Alrosa was sanctioned, and the shortage of supply intensified. The price of natural finished diamonds rose rapidly in February:
In February, IDEX finished diamond price index rose by 4.14% in a single month, 24.2% year-on-year and 6.2% month on month. The recovery after the epidemic in major global markets and the upgrading of Chinese consumption have led to a 29% increase in global retail sales of diamonds and jewelry and a 62.5% increase in India’s natural diamond exports in 21 years, a compound increase of 7.6% over 19 years. In the context of strong demand, the prices of natural rough drilling and bare drilling continued to rise in the past 21 years, rising by 21% and 9% respectively, which has returned to the historical average level since 2004.
Since the beginning of the year, the price of natural diamonds has continued to rise. In February, after the Russian Ukrainian war, Alrosa group was sanctioned, and the orders of middle and downstream enterprises in the diamond industry may face weeks and months of delay. At present, Alrosa’s sanctions are mainly limited account period and “USD payment”. Alrosa is also actively seeking to use “non USD method” to solve the payment crisis. As the conflict between Russia and Ukraine has not ended, there is the possibility of expanding sanctions in European and American countries, and the duration of this round of sanctions is not clear. The rising price of natural diamonds may drive natural diamond traders to turn to cultivating diamonds and accelerate the cultivation of diamonds.
From January to February of 22 years, the total sales volume of diamond jewelry cultivated was 10.28 million yuan, an increase of 218.62% at the same time. Satirona / huiyiyuan / xiaobaiguang / satirona / diamond foundry ranked among the top five in store sales in February.
Industry dynamics
Industry news:
Natural diamonds: De Beers turned losses into profits in 21 years, making a profit of US $345 million, and the sales of rough diamonds were US $4.9 billion, an increase of 43% at the same time; Brilliant earth announced the removal of Russian diamonds; In alrosa21, the sales volume of gem grade rough diamonds was 30.4 million carats, an increase of 28% at the same time; In the 21st year, the total import volume of finished diamonds in Shanghai Diamond Exchange was 2.924 billion US dollars, with a year-on-year increase of 105.3%.
Diamond Cultivation: Development Forecast of diamond cultivation in 2022: 1) India’s CVD production capacity complements the supply of broken diamonds; 2) Diamond manufacturers process both natural and cultivated diamonds.
Company dynamics: Henan Liliang Diamond Co.Ltd(301071) 21 annual revenue increased by 103.50% and net profit attributable to parent company increased by 228.17%; Chow Tai Fook signed a supply agreement with mountain province, Canada In Beijing Worldia Diamond Tools Co.Ltd(688028) 21, the revenue increased by 34.73% and the net profit attributable to the parent company increased by 9.42%.
Risk tips
The price of upstream expansion fell; Downstream consumer education was less than expected.
