As one of the "local specialties" in Henan, cultivating diamonds has been very popular recently. Luoyang Municipal Bureau of Culture and Tourism distributes cultivated diamonds to passengers at Longmen High-speed Railway Station and Longmen Grottoes, so that the cultivation of diamonds has attracted great attention from the market. However, the reporter's multi-party research found that due to the lack of downstream demand and other factors, the recent decline in the price of cultivated diamonds is relatively obvious, the intensity of terminal promotion is generally large, and the performance of relevant listed companies is poor.
The promotion of the terminal is strong.
Recently, the reporter visited a number of diamond-cultivated sales stores and found that as the Spring Festival is approaching, merchants have increased their promotion efforts. Some brand products are 50% off, and some ring products buy one and get one free.
At present, the price of a one-carat finished diamond ring is about 12,000 yuan. Even if the price is reduced and promoted, there is still a certain profit margin. At present, the biggest problem in the industry is insufficient demand. Taking a 1-carat cultivated diamond as an example, the wholesale price is currently about 2,000 yuan, the wholesale price of the platinum ring is about 1,800 yuan, plus the cost of artificial inlay is about 4,000 yuan. A dealer told the reporter of China Securities News.
The price of natural diamonds has also fallen significantly. First-tier brands such as Zhou Dafu and China Gold have offered discounts ranging from 50% to 50% off for diamond products.
Regarding the reason for the price decline, Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Centre of Zhejiang University International United Business School, told reporters that the value of diamonds lies largely in scarcity. The threshold for cultivating diamonds is not high, and the supply has increased, but the demand has not kept up. From the downstream point of view, cultivating diamonds has not formed a good brand.
Zhongyuan Securities believes that the sales price of cultivated diamonds has fallen one after another due to the expansion of production capacity and the weakening of demand. The price of domestic diamond raw stone and bare stone has touched the cost line. With the increase of production capacity, the price of cultivated diamonds may continue to fall under the background that demand has not improved significantly.
Zhongbing Hongjian, a diamond manufacturer, said that some small manufacturers entered and competed at a low price, but the quality would also decline. The company is not afraid of a price war, and the company has an overall cost advantage.
Poor performance in general
According to public information, Henan Province accounts for 80% of the production capacity of domestic diamond cultivation. The production of raw diamonds cultivated by three leading listed companies, Zhongbing Red Arrow, Yellow River Cyclone and Power Diamond, has reached 90%.
In terms of performance, the Yellow River Cyclone expects that the net profit attributable to shareholders of listed companies in 2023 will be -645.02 million yuan, and the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses will be -651.85 million yuan. During the reporting period, the price of the company's cultivated diamond products fell sharply, resulting in poor performance of its main business.
Although Zhongbing Red Arrow and Power Diamond did not disclose their 2023 performance forecast, the performance of the two listed companies declined to varying degrees in the first three quarters.
In the quarter of 2023, Zhongbing Red Arrow achieved a total operating income of about 3.008 billion yuan, a year-on-year decrease of 37.85%; the net profit attributable to shareholders of listed companies was 205 million yuan, a year-on-year decrease of 76.69%. The company said that the terminal demand has weakened, and the sales of cultivated diamonds have declined.
In the first three quarters, Power Diamond achieved a total operating income of 561 million yuan, a year-on-year decrease of 16.73%; the net profit attributable to shareholders of listed companies was 263 million yuan, a year-on-year decrease of 24.86%.
Industry standards need to be introduced urgently
The reporter learned from many interviews that at present, the industry standard for cultivating diamonds refers to natural diamonds.
Liu Chunsheng, an associate professor at the Central University of Finance and Economics, told reporters that the decline in the price of cultivated diamonds is mainly due to the increase in supply, the continuous improvement of production capacity, and even overcapacity. In the past, diamonds were luxury goods and value-preservation products bought by young people when they got married. With the emergence of cultivated diamonds, the positioning of diamonds has been greatly reduced. While overcapacity is over, cultivating diamonds lacks well-designed high-end brands, and there are no hot products or Internet celebrity products. In addition, relevant departments need to formulate industry standards in a timely manner.
From the perspective of technical means, the production of cultivated diamonds is mainly divided into high temperature and high pressure and CVD chemical vapour deposition. The production capacity layout of cultivated diamonds in China mainly adopts the high-temperature and high-pressure method. The cultivated diamonds produced in this way generally appear in the shape of water droplets, have a better appearance, and are easy to produce large-carat diamonds. The disadvantage is that the high-temperature and high-pressure method is expensive. In addition, industry experts believe that technical means such as cutting need to be further strengthened.
Source: China Securities News