Comments on light industry manufacturing industry: in March, the amount of drilled holes cultivated in India reached a new level and continued to verify the industrial trend

In March 22, the number of drilled holes cultivated in India rose to a higher level, and the industrial trend was continuously verified

Event: on April 16, GJEPC released the import and export data of India's cultivated drill in March. The import volume was US $203 million, with a year-on-year / month on month increase of 157.0% / 31.0%. The import volume last month was US $155 million, with a year-on-year / month on month increase of 84.4% / 1.2%. The category penetration rate of cultivated drill in March was 9.1%, with a year-on-year increase of 2.1pcts. After exceeding 150 million US dollars in January, the import volume exceeded 200 million US dollars again, reaching a new level; In March, the export volume of cultivated drilling was 137 million US dollars, with a year-on-year / month on month increase of 58.5% / 8.8%. The export volume of last month was 126 million US dollars, with a year-on-year / month on month increase of 113.5% / 3.2%. The export volume of cultivated drilling penetrated 5.9% in March, approaching the historical peak of 6% for two consecutive months, and the prosperity of cultivated drilling demand continued to be verified.

In March, the import and export balance of cultivated drilling expanded, and it was verified that the impact of insufficient supply and India's production expansion was not obvious

Since December 2021, the import volume of India's cultivation drill has been continuously higher than the export volume, expanding month on month. The gap reached US $66 million in March 2022, which continues to verify our previous judgment that the expansion of India's CVD production has not affected the supply of cultivation drill. At present, the supply of the industry is insufficient, and the growth rate is still restricted by China's capacity expansion. This conclusion can also be confirmed by the synchronous decline and recovery of India's import and export data and Henan flood last year. China's upstream producers accelerated the expansion of production. On March 25, Henan Liliang Diamond Co.Ltd(301071) issued a fixed increase plan, which plans to raise no more than 4 billion yuan, of which 2.19 billion yuan is used for the construction of intelligent factory projects, and 1.6 billion yuan is used for the construction of phase II diamond and cultivating diamond intelligent factory projects; On April 6, Henan Huanghe Whirlwind Co.Ltd(600172) issued the fixed growth plan, which plans to raise no less than 800 million yuan and no more than 1.05 billion yuan, of which 800 million yuan is used for the construction of diamond industrialization projects.

The price fluctuation of natural drilling is superimposed with the expectation of high inflation, and the uncertainty may promote producers to explore and cultivate drilling

After the IDEX price index rose by 6.2% from January to February, the IDEX price index rose in March and fell back. At the end of the month, the index closed at 155.3, slightly higher than 154.4 at the beginning of the month. On April 7, the United States included Alrosa in the SDN sanctions list, superimposing the expectation of high inflation in the United States to curb consumer demand, resulting in the cooling of the current natural diamond trade and many wait-and-see buyers. It is expected that the uncertainty of the natural diamond market will encourage manufacturers to explore and cultivate the diamond market. According to the prediction of Paul zimnisky and edahn Golan, the proportion of cultivated diamond jewelry market is expected to reach 7% in 2022, and the total retail sales of cultivated diamond is expected to exceed US $8 billion in 2023, with the market proportion rising to 10%.

Investment advice

In March, India's import data of cultivated diamonds reached a new level and continued to verify the industrial trend and demand boom. The impact of CVD production expansion in India has not yet appeared, and the current growth rate of the bank is restricted by supply. Natural diamond market price fluctuation + high inflation may prompt producers to dabble in cultivated diamonds. China's production capacity is expected to continue to increase in 2022. It is suggested to cultivate diamond manufacturers that pay attention to the breakthrough of dakla process and the stable release of performance brought by new production capacity Henan Liliang Diamond Co.Ltd(301071) , Henan Huanghe Whirlwind Co.Ltd(600172) , North Industries Group Red Arrow Co.Ltd(000519) .

Risk tips

Macroeconomic growth is less than expected, resulting in the decline of residents' purchasing power; The intensified competition in the cultivation diamond industry led to price fluctuations, and the increase of industry penetration was less than expected.

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