Jiang Diamond shares: flammable ice, shale gas has little effect on the company

Abstract On March 18, Jiang Diamond Co., Ltd. (000852) held its 2012 Annual General Meeting of Shareholders. Following the meeting, Xie Yongjin, the company's Vice Chairman, provided insights into the company’s interest in emerging energy resources such as combustible ice and shale gas. He emphasized that the development of combustible ice is fundamentally different from traditional oil and natural gas extraction. At this stage, it is still in the research phase, and it remains unclear whether Jiang Diamond’s products will be applied in this field. As a result, it currently has no significant impact on the company’s operations, though the company is closely monitoring the progress. Regarding shale gas, Xie noted that while China possesses vast reserves, the challenges of extraction are far greater than those in the United States. In the U.S., shale gas is typically found in flat, accessible areas, whereas in China, most reserves are located in the mountainous southwest region. The complex geological conditions and uneven distribution of resources make the process more difficult and expensive. Although Jiang Diamond’s products offer advantages in construction under challenging terrain, the industry is still in the early stages of research, and large-scale commercial use is expected to take many years, which means little direct impact on the company’s financial performance at present. Wang Yibing, Director of Jiang Diamond Co., Ltd., highlighted the company’s two core products. The roller cone bit holds an 80% market share in China, giving the company a strong competitive edge. However, due to its relatively simple manufacturing process, the diamond drill bit faces intense competition in the market. Despite this, the company reported strong financial results for 2012, with operating income reaching 1.84 billion yuan, up 16% year-on-year, and net profit rising to 130 million yuan, an increase of 25%. These figures reflect the company’s continued growth and stability in a competitive industry.