Investment advice
The overall valuation of the 22q1 sector has been adjusted, and the valuation cost performance has been highlighted. The fundamentals have been switched from “21 years of production expansion + structural price increase caused by the increase of carat number” to “22 years of specific assembly speed + structural price increase caused by the improvement of yield rate + continuous price increase of industrial diamonds to increase the performance elasticity”. The attribute of rapid growth of the industry has not changed. It is suggested that Q2 focus on cultivating the diamond sector, and North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) , Henan Liliang Diamond Co.Ltd(301071) , Sinomach Precision Industry Co.Ltd(002046) Sf Diamond Co.Ltd(300179) 。
Market Review
In recent months (March 17, 2022 ~ April 15, 2022), the Shanghai Composite Index, Shenzhen Component Index and Shanghai and Shenzhen 300 rose 1.28%, 2.94% and 0.79% respectively, and the cultivated diamond sector fell 0.44%, outperforming Shanghai and Shenzhen Chongqing Zhifei Biological Products Co.Ltd(300122) pct. In terms of sector comparison, the middle reaches of diamond cultivation. In terms of individual stocks, Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) , North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) led the increase, and Mclon Jewellery Co.Ltd(300945) , Henan Liliang Diamond Co.Ltd(301071) , Beijing Worldia Diamond Tools Co.Ltd(688028) led the decline.
Data tracking
Cultivated drill: in March of 22, the import volume of rough drill was + 157.1% year-on-year, and the export volume of bare drill was + 59.5% year-on-year. 1q22 import and export increased by 105.5% and 77% respectively. The month on month slowdown in export growth in March is expected to be mainly due to monthly fluctuations and the epidemic in Hong Kong (accounting for about 14%). The demand for cultivating drilling terminals continued to be strong. The prices of main raw materials such as nickel, iron powder and tungsten carbide powder have accelerated over the past 22 years.
Natural drilling: in March of 22, the import / export volume increased by 45.2% / 3.1% respectively, and 1q22 increased by 29% / 9% respectively. The export growth rate is expected to be mainly as follows: 1) China’s import volume decreased by 7% from January to February, and the demand was sluggish; 2) The epidemic situation in Hong Kong in March (accounting for about 30%); 3) Alrose (contributing 30% of global production capacity) was sanctioned by the United States. IDEX finished diamond price index slowed down month on month growth in March, with a large decline in small particles.
Industry dynamics
Industry news: 1) natural diamonds: the total revenue of De Beers’s third Fair (03280412) is estimated to be US $565 million, an increase of 25.6% and a decrease of 13.3% month on month compared with the second fair. The group is still cautious; Alrosa was included in the SDN sanctions list by the United States; Tiffany has suspended all rough diamonds from Russia. 2) Cultivating diamonds: Zhou Shengsheng created a diamond retail website Mclon Jewellery Co.Ltd(300945) plans to establish a joint venture to cultivate diamond field; FeiMeng diamond’s annual output of 1 billion carats of functional materials project started.
Key announcement: Henan Huanghe Whirlwind Co.Ltd(600172) plans to raise 800-1.05 billion yuan (800 million for cultivating drilling industrialization projects) with 7.14 yuan / share of fixed increase shares Not more than 4 billion yuan Sf Diamond Co.Ltd(300179) 21 year revenue 417 million yuan, an increase of 30.9%; The net profit attributable to the parent company was 920277 million yuan, an increase of 22.23% at the same time; It is estimated that the net profit attributable to the parent company in 2022q1 will be 36-42 million yuan, an increase of 59.27% – 85.82% at the same time; Deduct non net profit of RMB 30-35 million, with an increase of 37.03%-59.87% In Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) 21, the revenue was 51.063 billion yuan, an increase of 12.15% at the same time; The net profit attributable to the parent company was 3.861 billion yuan, an increase of 6.92% at the same time In Sinomach Precision Industry Co.Ltd(002046) 21, the revenue was 3.328 billion yuan, an increase of 41.3% at the same time; The net profit attributable to the parent company was RMB 127million, an increase of 104.55% at the same time. It is proposed to distribute a cash dividend of RMB 102 per 10 shares In North Industries Group Red Arrow Co.Ltd(000519) 21, the revenue of express was 7.514 billion yuan, an increase of 16.26% at the same time; The net profit attributable to the parent company was 472 million yuan, an increase of 71.93% at the same time; It is estimated that the net profit attributable to the parent company in 2022q1 will be 240280 million yuan, an increase of 148.14% – 189.5% at the same time.
Risk tips
The price of upstream expansion fell; The release of downstream demand is less than expected; The price of raw materials has risen too fast.
