Core view
Tracking the rise and fall of the sector: this week, the Shanghai Composite Index fell 1.63%, the Shenzhen Component Index fell 1.35%, and the gem index rose 0.73%. A-share diamond sector fell 5.45%, and Chow Tai Fook, the subject of Hong Kong stocks, rose 6.56%.
Indian diamond import and export data: in November 2021, India’s imports of cultivated diamond blanks amounted to US $85 million, a year-on-year increase of + 37.15% and a month on month increase of – 16.96%; The export volume of cultivated diamond bare diamonds was 86 million US dollars, a year-on-year increase of + 24.45% and a month on month increase of – 41.35%. The import volume of natural diamond blanks was US $1.040 billion, with a year-on-year increase of – 6.49% and a month on month increase of – 24.39%; The export volume of natural diamond naked drilling was US $1.303 billion, a year-on-year increase of – 20.81% and a month on month increase of – 49.12%. The permeability at the outlet of cultivated diamonds increased to 6.18%, with a month on month ratio of + 0.77pct.
Industry news: Alosa announced its operating results in 2021. In 2021, the company’s diamond sales revenue reached US $4.169 billion, a year-on-year increase of 50%, and a year-on-year increase of 21% compared with 2019; Cultivate the overweight layout of diamond leading enterprises. Since 2021, North Industries Group Red Arrow Co.Ltd(000519) has invited tenders for multiple 900 presses, Henan Huanghe Whirlwind Co.Ltd(600172) said it plans to raise 8 billion yuan to purchase 4000 presses, Henan Liliang Diamond Co.Ltd(301071) said it plans to invest 516 million yuan in the fund-raising project of its intelligent chemical plant, and it is expected that 320 six sided top presses will be added in three years.
Announcement of the company: Sinomach Precision Industry Co.Ltd(002046) released the performance forecast for 2021. It is expected to realize a net profit of 120 million to 160 million in 2021, with a year-on-year increase of 92.71% – 156.95%; The net profit after deducting non recurring profits and losses is expected to be 70 million yuan to 100 million yuan, with a year-on-year increase of 419.29% – 641.84%. The company’s core business has achieved good development, and the bearing business and superhard material products business have increased significantly, driving the overall performance to rise.
Investment suggestion: the penetration rate of cultivated diamonds in the overall consumption of diamonds is only 6%. With the advantages of cost performance and the vigorous publicity of leading jewelers, consumer recognition has been continuously improved, and the downstream demand is growing rapidly. China’s diamond production is mainly cultivated by high temperature and high pressure method. Due to the capacity constraints of upstream equipment manufacturers and limited industrial expansion, it is recommended to pay attention to Henan Liliang Diamond Co.Ltd(301071) , North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) with high market share and good cooperation with upstream equipment manufacturers, and upstream equipment manufacturers Sinomach Precision Industry Co.Ltd(002046) .
Risk tip: the downstream demand is less than expected, the production capacity is less than expected, and the industry competition is intensified
