Nurturing the diamond industry: low penetration and high growth, close to the 10% inflection point, equivalent to new energy vehicles in 2022) the global demand for cultivated diamond raw stones is expected to increase from 9.3 billion yuan in 2021 to 31.3 billion yuan in 2025, with a compound growth rate of 35%. From January to June 2022, the cumulative import / export of cultivated diamonds in India increased by 72% and 81% compared with the same period last year, and the prosperity continued to rise.
2) in 2019, the average domestic market penetration of new energy vehicles was less than 5%. The average penetration rate of domestic new energy vehicles exceeded 10% in 2021 and reached 19% at the end of the year, a record high. Before 2021, the import and export permeability of Indian cultivated diamonds was less than 5% from 2021 to 2022, and the import and export permeability doubled from 2021 to 2022, approaching the 10% inflection point, which is expected to replicate the high growth of new energy vehicles. It is estimated that by 2025, the penetration rate of global cultivated diamond sales will reach 16%, and the penetration rate of the United States, as a major consumer, will reach 23%.
Future prospects: synthetic diamond is not only to cultivate diamonds, but also is expected to cut into the field of new generation semiconductor materials in the future. Diamond is one of the most promising new generation semiconductor materials. Its thermal conductivity and bulk material mobility are the highest in nature, so it has great potential in the field of power semiconductor devices. At present, countries all over the world are stepping up the research and development of diamond in the field of semiconductors. among them, Japan has successfully developed a mass production method of ultra-high purity 2-inch diamond wafers, which has a storage capacity equivalent to 1 billion Blu-ray discs. As China accelerates the promotion of key technological breakthroughs, functional diamond materials will change from laboratory stage to commercialization. We believe that synthetic diamond is not only to cultivate diamonds, but also is expected to cut into the field of new generation semiconductor materials.
Sifangda: the leader of composite superhard materials, the traditional main business is steady and high growth, CVD cultivates diamonds to open the space for growth. 1) Resource exploitation business: deep technology accumulation, the first domestic market share of oil composite, demand continues to recover with the recovery of oil service demeanor, import substitution + major customer strategy continues to advance, according to our May in-depth report. Resource extraction business (56% in 2021) is expected to grow at a compound rate of 15% in 2022-2024 2) Precision processing business: benefiting from the upgrading of high-end manufacturing such as automobiles and the demand for domestic alternatives, import substitution of superhard tools + alloy substitution promotes sustained high performance growth, and precision processing business (38 per cent in 2021) is expected to have a compound revenue growth rate of 38 per cent from 2022 to 2024.
3) CVD nurturing diamond: domestic CVD nurtures one of the companies with the most advanced diamond technology reserve, the largest production expansion and the highest quality. Progress of production expansion: the first phase of 100000 carat diamond production line has entered the stage of commissioning and operation; the construction of the second phase of 100,000 carat production line has been started; MPCVD equipment self-research, fewer production bottlenecks, the company's production capacity is expected to achieve rapid and effective expansion; product quality: break through the Ehammer F color cultivation diamond technology, has been able to steadily produce large particles, high-grade colorless CVD cultivated diamond raw stones, industry leading Layout of the whole industry chain: cooperate with Hainan jewelry to demonstrate the possibility of establishing a joint venture company, building and cultivating diamond production capacity in Hainan free trade port and the whole industry chain cooperation, which is expected to help the company to expand production in the free trade zone and expand downstream sales channels.
Investment suggestion: the performance of the traditional main business is outstanding. CVD cultivates diamonds to expand production, and the product quality exceeds expectations. The company's 2022-2024 net profit is 1.7 million yuan, up 80%, 48%, 25%, and the compound growth rate is 49%. The company maintains the "buy" rating, corresponding to the PE of 55-38-30.
Risk hint: cultivate diamond competition pattern and profit change, raw material price fluctuation risk