When it comes to Huanghe Whirlwind, one must mention the cultivation of diamonds.
Huanghe Whirlwind is currently the leading supplier of superhard materials in China, with the most complete variety and the most complete industrial chain. According to a Huanghe Whirlwind research memo, Swarovski once proposed cooperation, requiring a monthly supply of 500-600 million yuan worth of cultivated diamonds. However, due to its own production capacity issues, Huanghe Whirlwind had to decline this cooperation. This shows that Huanghe Whirlwind's products are recognized, and downstream demand is increasing.
Opportunity One: Pandemic Recovery and Consumer Upgrading
Affected by the pandemic, consumption and weddings in major Chinese cities were stagnant in the first and second quarters. With the pandemic in Shanghai and Beijing entering the final stage and the launch of the new coronavirus oral medication, retaliatory consumption is imminent. According to statistics, the number of marriage certificates issued on May 20th this year is still increasing compared to previous years, more than twice that of Valentine's Day. As an indispensable wedding category in today's Chinese society, diamonds will explode in the second half of the year. At the same time, benefiting from the Internet celebrity economy and e-commerce platforms, the high cost-effectiveness of cultivated diamonds has made them widely recognized in China, and the recognition of cultivated diamonds by the vast majority of middle-class families is higher than that of natural diamonds.
The global demand for cultivated diamonds has doubled, and past performance has shown growth of 150%-200%. It is expected to double this year.
Data: The annual compound growth rate of demand from now to 2025 is 30%, not less than 20%. Currently, the entire industry only satisfies 85% of the market demand.
"Opportunity Two: Russia-Ukraine Conflict
Event: On May 7th, Indian media reported that a U.S. customer requested that Indian traders prove that their exported diamonds did not come from Russia, which has dealt a major blow to the industry.
1. The core of the current natural diamond price increase is the mismatch between supply and demand, as supply is affected by the pandemic while demand is recovering in European and American consumer markets.
2. The U.S. is boycotting Russian diamonds, as Russia supplies over 30% of the world's rough diamonds. The event has caused disruptions in the supply side.
3. The continuous rise in natural diamond prices may affect downstream demand and compress the profits of midstream Indian enterprises. Prices are expected to stabilize at high levels.
4. The high price of natural diamonds is conducive to the penetration rate of cultivated diamonds.
The cultivation of diamonds is a very attractive field and undoubtedly a very certain one for the next 2-3 years. The main focus is on the low penetration rate, high growth, and high gross margin of cultivated diamonds. Secondly, industrial diamond production is declining with no new capacity added, and the rapid price increase brought about by downstream demand growth.
Opportunity Three: Mixed Ownership Reform of State-Owned Assets
Xuchang City Investment Smart City Development and Construction Co., Ltd. has continued to increase its holdings in the company, benefiting from the promotion of mixed ownership reform of state-owned assets. With the recent hot trend of state-owned asset reform, Huanghe Whirlwind, as a bottoming target, also has the opportunity to catch up.
Opportunity Four: Third-generation Semiconductor Materials
Diamonds are an important member of third-generation semiconductor materials, and the company has conducted related industry application research. This information comes from the company's secretary, with extremely high credibility. With the promotion of the strategy of rejuvenating the country through science and technology and the process of domestic substitution, Huanghe Whirlwind has the opportunity to become an upstream material supplier.
In summary, it is not difficult to see that the cultivation of diamond track has many similarities with the electronic cigarette track that was popular in the past few years. It is currently in a period of rapid development, land-grabbing, and high gross margin. The industry concentration is very high. As an absolute leader with a market share of nearly 30% and a high-end market share of nearly 60%, Huanghe Whirlwind is comparable to companies like CATL and SMIC. In addition, among the three diamond giants, China North Industries and CITIC have rebounded by more than 20 points in the short term, while Huanghe Whirlwind is currently stagnant and has a demand for catch-up."