Yahua Group(SZ:002497) Huafu Securities·2025-08-21 09:26Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6]. Core Views - The company reported a 33% year-on-year increase in net profit for the first half of 2025, despite a 13% decline in revenue, primarily due to falling lithium prices. The stable performance of the civil explosives segment supported overall earnings [3][4]. - The lithium business saw a revenue decline of 26% year-on-year, with a gross margin of 1.63%, while the civil explosives segment experienced a 3.7% revenue increase and a gross margin of 35.9% [5][6]. Financial Performance Summary - For the first half of 2025, the company achieved operating revenue of 3.423 billion yuan, a decrease of 13% year-on-year. The net profit attributable to the parent company was 136 million yuan, an increase of 33% year-on-year, while the net profit after deducting non-recurring items was 75 million yuan, a decrease of 0.17% year-on-year [4]. - In Q2 2025, the company reported operating revenue of 1.886 billion yuan, a quarter-on-quarter increase of 23%, with a net profit of 53 million yuan, down 35% quarter-on-quarter [4]. Lithium Business Insights - The lithium business generated revenue of 1.764 billion yuan in the first half of 2025, down 26% year-on-year. The average market price for lithium carbonate was 70,300 yuan per ton, a decrease of 22% compared to the average price in 2024 [5]. - The company is expected to produce 280,000 tons of Kamativ lithium concentrate this year, with plans to increase production to 350,000 tons next year, significantly enhancing its self-supply capability [5]. Civil Explosives Business Insights - The civil explosives segment reported revenue of 1.465 billion yuan in the first half of 2025, an increase of 3.7% year-on-year, with a net profit of 253 million yuan, reflecting a 2.4% growth [6]. - The company holds a market share of nearly 5% in industrial explosives and over 11% in electronic detonators in China, with significant market share increases in the Sichuan region [6]. Profit Forecast and Investment Recommendations - The company is projected to achieve net profits of 493 million yuan, 679 million yuan, and 843 million yuan for 2025, 2026, and 2027, respectively, reflecting a downward adjustment in lithium price and production volume expectations [6]. - The corresponding price-to-earnings ratios (P/E) are estimated to be 33, 24, and 19 times for the respective years, with a maintained "Buy" rating due to the significant potential for increased self-supply in the lithium business [6].