Author|Ding Zhenyu, Editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
1. High barriers to the civil explosive industry
Civil explosives are widely used in important fields such as mining, oilfield development, engineering construction, resource exploration and deep processing. Under the background of increasing domestic mineral resources reserves and production and major mining enterprises continuing to acquire ores overseas, the demand of the civil explosive industry is stable and upward, and the strict policy restrictions on the total supply make the industry a high-quality track for the supply and demand pattern.
The high-risk nature of the civil explosive industry determines that the industry faces strong supervision and extremely high operating barriers. Civil explosive products are flammable and explosive, and safety management is of great importance, so the mainland has very strict supervision and management measures for the civil explosive industry. The national and provincial industry administrative authorities and the Ministry of Public Security supervise the whole cycle of civil explosive enterprises in mainland China from production to sales, storage and transportation, and engineering construction and use.
Second, the policy is expected to promote the concentration of the civil explosive industry
The "14th Five-Year Plan" for the Safety Development of the Civil Explosives Industry proposes that the future industry policy will be tilted towards the top 10 enterprises to support the mergers and acquisitions of advantageous enterprises. The "Development Plan" proposes that by the end of the "14th Five-Year Plan", the output value of the top 10 enterprises will account for 60% or more, and the number of civil explosive production enterprises should be reduced to less than 50, and the industrial concentration will continue to increase, so as to form 3-5 large-scale civil explosive integrated enterprises (groups) with strong industry driving force and international competitiveness.
Affected by this, through industry mergers and acquisitions, the civil explosive industry is expected to form a small number of regional leaders, and the development speed of leading enterprises will be significantly faster than the average growth rate of the industry, and the competitive advantage is expected to continue to maintain and strengthen. Policies encourage and support the mergers and acquisitions of advantageous enterprises, and leading enterprises are expected to benefit more.
Third, the downstream demand is gradually improving
The price of products in key downstream application fields is at a high level, which is conducive to the demand of the civil explosive industry. According to the China Explosives Industry Association, in 2023, the consumption of industrial explosives used in coal, metal and non-metal mining will reach more than 70% of the total consumption. The consumption of industrial explosives used in the construction of railways, roads, water conservancy and hydropower accounts for about 8.5% of the total consumption.
Since 2023, the metal mining industry, non-metallic mining industry, and coal industry have a high degree of prosperity, and the industry's fixed asset investment has rebounded year-on-year, driving the demand for civil explosions.
Fourth, the civil explosive industry chain
The civil explosive industry can be basically divided into civil explosive products and blasting services. Civil explosive products include industrial explosives and initiating equipment; Blasting service refers to the one-stop paid blasting operation service provided by qualified professional blasting operation units for the use of civil explosives, such as purchasing, transportation, storage, blasting, and removal.
Fifth, focus on enterprises
The company is one of the integrated service providers of mine civil explosion with the most complete mining engineering service projects in China, and its mining service business revenue will reach 8.935 billion yuan in 2023, ranking first in China. In recent years, the growth rate of new orders signed by the company is much higher than the industry average, and the company's orders in hand exceed 30 billion yuan. At present, the company's mining service business mainly serves metal ores, followed by coal mines and sand and gravel aggregate mines.
YIPLI: With the integrated business of civil explosives as the core, the company extends to the engineering service market, mainly providing professional and integrated civil blasting services and general contracting services for green and digital intelligent mine construction for important energy projects, infrastructure construction and large-scale mining projects at home and abroad. The company's business covers about 20 provinces (autonomous regions and municipalities directly under the central government) in China and Namibia, Liberia, Pakistan, Malaysia and other countries.
Jinaobo: The company is the leader of the domestic civil explosive intelligent equipment industry, and is the first batch of "national high-tech enterprises" in China, providing one-stop comprehensive services for civil blasting industry customers to produce complete sets of process technology, intelligent equipment, software systems, and key raw and auxiliary materials for civil blasting equipment. The high-end intelligent complete sets of equipment researched and developed by the company have passed the appraisal and production acceptance of scientific and technological achievements organized by the Safety Production Department and the Science and Technology Department of the Ministry of Industry and Information Technology. All kinds of parallel robots and six-axis multi-joint robots have been applied in civil explosives, food, military industry, packaging and other fields.
Xuefeng Technology: The company takes the integrated service of engineering blasting as the core, and its business covers the "production, transportation and sales" of industrial explosives, detonators and cables and the "drilling, blasting, digging and transportation" of engineering blasting. It has professional service capabilities such as blasting scheme design, blasting engineering supervision, and planning and implementation of integrated mine blasting solutions.
Jiangnan Chemical: The company is a "dual-core driven" company integrating civil explosive business and new energy business, and the civil explosive industry covers more than 10 provinces, autonomous regions and municipalities directly under the central government, including Anhui, Xinjiang, Beijing, Shaanxi, Shanxi, Sichuan, Henan, Hubei, Fujian, Guangxi, Inner Mongolia and Jiangsu.
Cathay Pacific Group: The company is mainly engaged in civil explosive business and rail transit electrification and information engineering services, providing blasting services for mines and infrastructure projects. The company expands to the field of non-civil explosives, and builds a new business map of civil explosive integration + rail transit automation and informatization + coordinated development of military new materials industry.
Gaozheng Civil Explosives: The company is a company specializing in the scientific research, production, sales and blasting services of civil explosives. In 2023, a small amount of civil explosives will be exported to the Nepal market.
Poly United: The company has successfully developed electronic detonator production technology, equipment and products that have reached the international advanced level, and is one of the largest enterprises in the same industry in China and at the leading level in China. Its business has expanded to many countries, including Malaysia, Kazakhstan, Tajikistan, etc. Relying on the platform advantages of China Poly Group and Poly Jiulian Group, the company has established a joint venture and cooperative relationship with Orica Group, the world's largest civil explosive company.
(Author: Zhao Ling, Practicing Certificate: A0680615040001)
Disclaimer: The above content is for reference only and does not constitute specific operation advice, and you shall operate at your own risk and profit and loss