xuefeng Sci-Tech(group)(SH:603227) Minsheng Securities·2025-08-15 08:35Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 8.70 yuan and expected PE ratios of 16X, 11X, and 9X for the years 2025, 2026, and 2027 respectively [4][3]. Core Insights - The company has significant regional advantages, being located in Xinjiang, which has abundant resources. The demand for civil explosives in this region is expected to remain high due to its application in coal mining and other mining activities [2][3]. - As an industry leader, the company is positioned to benefit from consolidation in the civil explosives sector, with the potential for increased international competitiveness following mergers and acquisitions [3][4]. - The company’s projected net profits for 2025, 2026, and 2027 are estimated to be 5.93 billion yuan, 8.26 billion yuan, and 10.85 billion yuan respectively, indicating a positive growth trajectory [3][4]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved a revenue of 2.68 billion yuan, a year-over-year decrease of 4.96%, and a net profit of 233 million yuan, down 40.64% year-over-year. The second quarter saw a revenue of 1.55 billion yuan, a decrease of 5.11% year-over-year but an increase of 38.40% quarter-over-quarter [1][2]. - The company’s ability to produce and sell ammonium nitrate, a key raw material for explosives, positions it well to benefit from the rising demand in the civil explosives market [2][3]. Industry Outlook - The civil explosives industry is characterized by regional demand, with Xinjiang's total explosive production reaching 254,100 tons in the first half of 2025, a year-over-year increase of 9.63% [2]. - The Ministry of Industry and Information Technology's policy aims to consolidate the industry, potentially leading to the emergence of 3 to 5 large civil explosive companies with international competitiveness by 2027 [3].