Last week’s market:
The social services (Shenwan) sector index rose or fell by – 4.52% in the week, ranking 17 / 31 in the rise and fall of Shenwan industry.
Shanghai Stock Index (- 3.87%), Shenzhen Component Index (- 5.12%), Shanghai and Shenzhen 300 (- 4.19%) and gem index (- 6.66%).
Ranking of sub industries: SW professional services (- 4.11%), SW sports II (- 4.49%), SW Education (- 6.29%), SW tourism and scenic spots (- 8.41%), SW hotel catering (- 8.83%).
Top five gainers in social service industry: Emtek (Shenzhen) Co.Ltd(300938) (+ 7.69%), Zhejiang Ssaw Boutique Hotels Co.Ltd(301073) (+ 3.40%), Centre Testing International Group Co.Ltd(300012) (+ 3.19%), Pony Testing International Group Co.Ltd(300887) (+ 2.01%), Xueda (Xiamen) Education Technology Group Co.Ltd(000526) (+ 1.87%);
Top five declines in social service industry: Tongqinglou Catering Co.Ltd(605108) (- 16.93%), Guangzhou Grg Metrology&Test Co.Ltd(002967) (- 17.65%), Xi’An Qujiang Cultural Tourism Co.Ltd(600706) (- 20.27%), Hainan Dadonghai Tourism Centre (Holdings) Co.Ltd(000613) (- 22.10%), Tempus Global Business Service Group Holding Ltd(300178) (- 24.03%).
Core view:
The gap between supply and demand of natural diamonds has widened. The global natural diamond producing countries are mainly Russia, Australia and Congo. Affected by geopolitics, ESG evaluation criteria, mineral exploration and other factors, the natural diamond market will face a supply gap in the medium and long term. According to Bain data, from 2017 to 2020, the global diamond production decreased from 152 million carats to 111 million carats, while the global rough cultivation diamond production in 2020 was 07 million carats, an increase of 01 million carats compared with 2019; The permeability of cultivated drilling was 5.9%, an increase of 1.8 percentage points over 2019. The total output of global rough drills in 2021 is expected to be 116 million carats, an increase of 5% year-on-year, but still lower than about 20% in 2019; In the next five years, the output of raw stone can only increase at a rate of no more than 2%. By the end of 2021, the total upstream diamond inventory was 29 million carats, close to an all-time low.
Year on year change in March of 22 (India): the import of rough drill was + 45.22% year on year, and the export of bare drill was + 3.08% year on year. Change on a month on month basis in March 22 (India): the import volume of rough drilling was – 1.19% on a month on month basis, and the export volume of bare drilling was + 11.15% on a month on month basis.
The demand for diamond cultivation has soared, and there is a lot of room to improve the penetration rate. Since 2020, the import volume of Indian rough diamonds and the export volume of bare diamonds have generally shown an upward trend. In March 22, the import penetration rate of Indian cultivated diamonds was 9.06%, an increase of 157.08% and a ring increase of 30.97%; In March 22, India’s export penetration rate of cultivated diamonds was 5.87%, with a simultaneous increase of 59.45% and a ring increase of 8.90%. In the time window of the mismatch between supply and demand of natural diamonds, cultivating diamonds as substitutes for natural diamonds, with the advantages of diverse styles, short production cycle and high price, the market acceptance is getting higher and higher, boosting the steady increase of penetration rate.
Risk warning: the impact of repeated global epidemics on the industrial chain; Substantial price fluctuations; Market acceptance is lower than expected; Risk of industrial policy adjustment.
