Following its listing in September last year, Henan Liliang Diamond Co.Ltd(301071) ( Henan Liliang Diamond Co.Ltd(301071) . SZ) recently disclosed a fixed increase announcement of 4 billion, which triggered a heated discussion in the market. At the performance presentation meeting on April 15, the fixed growth plan and production capacity expectation were frequently mentioned by investors. Shao Zengming, chairman of Henan Liliang Diamond Co.Ltd(301071) chairman, said at the meeting that cultivating the rise of diamonds brings development opportunities to the industry, and the company hopes to occupy a higher market share. The fixed growth project plans to purchase 1800 six sided jacking presses.
According to the announcement, the company’s fixed increase projects are mainly used for capacity expansion, including equipment investment of about 3 billion yuan, R & D center construction investment of about 140 million yuan and supplementary working capital of about 210 million yuan.
Shao Zengming explained to investors at the meeting: “The company’s technical strength is at the forefront of the industry. From the perspective of installed capacity, the company ranks fourth in the industry. In order to cope with the rapidly growing market demand, the company accelerates the production expansion plan and hopes to occupy a higher market share in new market areas. The company plans to purchase 1800 six sided jacking presses in the fixed increase project, of which 1500 are used to cultivate diamond production. With the implementation of the fixed increase and expansion project, the company’s efficiency will be greatly improved.”
At the meeting site, Henan Liliang Diamond Co.Ltd(301071) did not disclose the current press quantity and production capacity of the company. If the fixed increase is successful, 1800 hexahedral jacking presses are planned to be purchased in three years. Tong Yue, the Secretary of the board of directors, said: “the company’s fixed increase project is being promoted and will spare no effort to solve the problem of equipment supply. At present, it is progressing smoothly, and the company is confident to complete the production expansion plan.”
With the rapid development of diamond cultivation, companies in the industry have accelerated their production expansion. In addition to Henan Liliang Diamond Co.Ltd(301071) , recently Henan Huanghe Whirlwind Co.Ltd(600172) ( Henan Huanghe Whirlwind Co.Ltd(600172) . SH) also announced to raise no more than 1.05 billion yuan to cultivate diamond industrialization projects.
Due to the limited supply of upstream press, some investors doubt the feasibility of capacity expansion. According to diamond observation, in 2021, there were about 3000 six sided presses producing and cultivating diamonds in China, and the annual production capacity of press equipment in the industry was about 1000, of which the annual production capacity of Sinomach Precision Industry Co.Ltd(002046) ( Sinomach Precision Industry Co.Ltd(002046) . SZ) six sided presses was 200300.
In terms of technology, the mainstream methods in the industry include high temperature and high pressure method (HPHT) and chemical vapor deposition (CVD), and Henan Liliang Diamond Co.Ltd(301071) mainly adopts high temperature and high pressure method. At the meeting, some investors were worried that CVD would have an impact and competitive impact on the company’s business. Shao Zengming replied that through years of research and development and technology accumulation, the cultivated diamonds produced have certain competitive advantages in terms of output and quality. At the same time, there is still great room for progress in high-temperature and high-pressure technology. The company also has certain technical reserves in this regard and will be gradually applied to mass production. At present, it has not felt the impact of CVD on the business, At present, the company can mass produce cultivated diamonds with a single grain of more than 10 carats.
It is worth mentioning that the production capacity of most companies in the industry is inclined to cultivate diamonds, squeezing the production capacity of industrial diamonds, and the supply of industrial diamonds is tightening. “Recently, the price of industrial diamond has increased by a certain margin,” Tong Yue said
According to the annual report of 2021, Henan Liliang Diamond Co.Ltd(301071) net profit was 239 million yuan, an increase of more than 2 times over the same period. According to the forecast for the first quarter of 2022, the net profit attributable to the parent company is about 93 million yuan to 103 million yuan. The company said: “the sales proportion of the company’s high gross profit product cultivation diamond business has increased significantly, the market demand of industrial diamond products is strong, the supply is tight, and the price has increased significantly compared with the same period last year.”
