Industry dynamics
Industry Recent SituationGJEPC announced the import and export data of Indian diamonds for March 2023. The import/export volume of cultivated diamonds for that month was -51.1%/-22.0% year-on-year, and+56.6%/-17.6% month on month; We estimate that the cumulative penetration rates from April 2022 to March 2023 will be 6.8%/7.1% respectively, with a year-on-year increase of -0.1%+2.0ppt. We expect that as the prices of cultivated diamond rough diamonds gradually stabilize，The penetration rate is expected to remain stable and increase.
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1. Cultivate the gradual recovery of diamond import volume compared to the previous month, and pay attention to the progress of replenishing stocks in the middle reaches. 1) In March, India's diamond cultivation import/export volume reached $99/111 million, a year-on-year increase of -51.1%/-22.0%, with a month on month ratio of+56.6%/-17.6%, with a significant year-on-year decline in import and export volume mainly due to a significant decrease in the price of rough diamonds; The import/export volume of natural diamonds for the month was 16.52/16.05 100 million US dollars, year-on-year at -18.9%/-33.1%, and month on month at -2.2%/-32.3%; 2) According to our calculation, the proportion of diamond imports/exports cultivated in March 2023 to diamond jewelry is 5.7%/6.5%, year-on-year -3.4/+0.6ppt; From April 2022 to March 2023, the cumulative import/export volume of cultivated diamonds accounted for 6.8%/7.1% of diamond jewelry, respectively, year-on-year-0.1/+2.0ppt。
2. The natural diamond price continues to decline, while the large particle cultivation diamond price gradually rebounds. 1) Natural diamonds: In terms of price, IDEX finished diamond price index in March 2023 compared to the same period last year-18.0%, month on month -0.21%, overall under pressure, prices continue to decline; According to Rapport data, the price of 0.3 carat bare diamond has remained stable and increased, which we believe is mainly due to Reduce production on the supply side, coupled with the support of the recovery of Chinese market demand; 2) Cultivating diamonds: According to LGDeal data monitoring, the discount rate of cultivated diamond products in March 2023 is somewhat different Compared to mid February, the price of high-quality small carat cultivation diamonds remained basically unchanged, while the price of medium-sized cultivation diamonds showed a single digit decline, while the price of high-quality large carat diamonds showed a double digit increase.
3. Both domestic and international terminals continue to have strong sales, and we are optimistic about cultivating a trend of diamond penetration. 1) Domestic market: According to Magic Mirror data, the sales revenue of the "Cultivated Diamond" category on Taobao reached 76 million yuan in MarchYuan, with a growth rate of 100.9%, penetration rate reaching 33.1%, and a growth rate of 18.4ppt. Domestic terminal sales continue to show a high growth trend, and consumer recognition continues to increase; 2) Overseas market: According to According to Tenoris market data, diamond sales in the US market continued to grow in March 2023, with sales volume/sales volume increasing by 50%/16% respectively; The average price has increased month on month 2.4%, the first consecutive month on month growth in consecutive months; In terms of individual specifications, the average carat weight has increased by 1.7% month on month to 1.82 ct, and we believe that 'larger at the same price' The concept of "grain" is further gaining recognition, and with the gradual layout of major brands and retailers, as well as the continuous penetration brought about by the price decline, we are optimistic about cultivating the diamond market Rapid expansion.
Valuation and recommendations
We continue to be optimistic about the medium to long-term growth prospects and increasing penetration rate of cultivating diamonds. As the prices of cultivating diamond rough diamonds gradually stabilize, the valuation of some leading enterprises is still at a low level For lower positions, it is recommended to use Power Diamond, Zhongbing Red Arrow, and Huifeng Diamond.
risk
Production capacity investment is less than expected, consumer acceptance is less than expected, and price fluctuations are significant.