Author|Ding Zhenyu, Editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
Jufeng Investment Advisor's latest column "Leading Analysis" was officially launched. There will always be a sector or concept in the A-share market to lead the market to rise during the stage time, and this column will focus on the stocks with the highest popularity or the most consecutive stocks in the current market for analysis, with the aim of screening out the value investment targets with "real materials" from the hot spots.
Since entering May, the civil explosive industry has continued to strengthen, Tibet's civil explosive leader Gao Biao civil explosives rose again today, this month's increase has exceeded 50%, Poly United has successfully entered two, why is the civil explosive industry so strong, what is the logic behind it? What other stocks in the industry are worth paying attention to?
The main logic of the strength of the civil explosive industry this time is that it is affected by the improvement of the fundamentals of the industry, and the main points are as follows:
1. Supply side: The industry's production capacity has been cleared up and accelerated, and the concentration has been further improved
The civil explosive industry is one of the few sub-industries in the chemical industry that is strictly constrained on the supply side, and the production capacity is strictly controlled by the license system, and from 2013 to 2014 to the present, the domestic new batch of production capacity has basically stopped. While strictly controlling the new production capacity, the competent department of the civil explosive industry encourages leading and backbone enterprises to carry out mergers and acquisitions in accordance with the principles of enterprise voluntariness, government guidance, and market-oriented operation. The "13th Five-Year Plan" proposes to cultivate 3 to 5 leading companies in the civil explosive industry with a certain industry driving force, and the GDP of the top 15 enterprises in the whole industry accounts for more than 60%, and the "14th Five-Year Plan" continues to promote the restructuring and integration of the industry, reducing the number of production enterprises to less than 50 in 2025, and the GDP of the top 10 civil explosive enterprises is greater than 60%. And the formation of 3-5 large-scale civil explosive integration enterprises with strong industry driving force and international competitiveness.
2. Demand side: The bottom of investment in the mining industry has reversed, and the demand in the traditional peak season is expected to accelerate
Mining is the main demand of the downstream of the civil explosive industry, and the gross domestic product of the civil explosive industry and the investment amount of the mining industry have the same fluctuation trend, so the civil explosive industry as a whole shows cyclical fluctuations. Civil explosives are mainly used in the mining of coal, metal and non-metal mines, and the three types of mines accounted for 72.6% of the sales of civil explosive products in 2020. In 2021, the capital expenditure of the mainland's mining industry will be about 93 million yuan, a year-on-year increase of 10.1%, showing a rebound trend. In addition, the issuance of ultra-long-term special treasury bonds in 2024 will increase investment in domestic infrastructure construction, which will also drive the demand for civil explosive products to increase.
3. The scale of the civil explosives industry has maintained steady growth
According to the statistics of the China Blasting Industry Association, the GDP of China's civil explosive industry production enterprises increased from 31.03 billion yuan in 2018 to 39.36 billion yuan in 2022, with a compound annual growth rate of 6.13%.
Data source: Han Academy Think Tank, China Blasting Industry Association
With the advancement of the "integration" of civil explosives, the income from blasting services has now become an important economic growth support for the civil explosives industry. According to the statistics of the China Blasting Industry Association, the revenue of blasting services in the mainland civil explosives industry increased from 19.91 billion yuan in 2018 to another 32.94 billion yuan, with a compound annual growth rate of 13.4%. According to the industry data in 2023, the economic indicators of the civil explosive industry have grown steadily, the adjustment of product structure has continued to be optimized, and the industrial concentration has continued to increase. The total production value of production enterprises was 43.658 billion yuan, a year-on-year increase of 10.93%; The total sales value was 43.448 billion yuan, a year-on-year increase of 11.73%.
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A key company listed in the A-share civil explosives industry
The qualification certification barriers of the civil explosive industry are high, and it is difficult for outsiders to enter. In terms of gross domestic product, the market share of CR5 in the civil explosive industry in 2022 will be 32.3%, with a total gross domestic product value of 12.70 billion yuan, and the company with the highest market share is North Special Energy, accounting for 10%; The competition pattern is relatively scattered, and the industrial concentration needs to be improved.
Data source: Huajing Industry Research Institute
The core stocks in the civil explosive industry on the A-share market are: YIPLI (the second largest market share of civil explosives in China), Poly United (the domestic leader in electronic detonators, and the state-owned assets controlled by the central government have been approved), Gaozheng Civil Explosives (the leading civil explosives in Tibet), Jinaobo (the leader in civil explosive intelligent equipment) Huhua Co., Ltd. (the digital electronic detonator business is bright), Xuefeng Technology (a veteran state-owned enterprise in Xinjiang), etc. In the short term, the sector still maintains a high degree of activity, and it is recommended to pay attention to the civil explosion concept stocks with performance support at the bottom.
(Author: Ding Zhenyu Practicing Certificate: A0680613040001)
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