Guotou Securities·2025-11-20 13:38Investment Rating - The report maintains an investment rating of "Outperform the Market - A" for the industry [5]. Core Insights - The civil explosives industry is experiencing a stabilization in scale, with effective integration and optimization of supply-side dynamics. The industry is projected to have a production value of 41.695 billion yuan in 2024, a year-on-year decrease of 4.50%, while the total sales value is expected to be 41.142 billion yuan, down 5.26%. However, the total profit is anticipated to grow to 9.639 billion yuan, reflecting a year-on-year increase of 13.04% [1][3][23]. Summary by Sections 1. Industry Scale and Policy Integration - The civil explosives industry is gradually stabilizing, with policies promoting integrated operations in production and blasting services. The main raw material, ammonium nitrate, remains at a low price, supporting the industry's profitability [14][19]. - The industry has seen a compound annual growth rate (CAGR) of 8.17% in production value from 2016 to 2023, with a significant increase in blasting service revenue from 8.061 billion yuan in 2016 to 35.311 billion yuan in 2024, representing a CAGR of 20.28% [1][29]. 2. Supply-Side Optimization and Industry Concentration - The civil explosives industry is undergoing significant consolidation, with the number of production enterprises decreasing from over 400 in 2005 to fewer than 50 by 2025. The top 10 enterprises' production value share has increased from 41% in 2018 to 62.47% in 2024 [2][42]. - The industry is characterized by a shift in production capacity towards the central and western regions of China, driven by demand from mining and infrastructure projects [2][3]. 3. Mining Investment Growth and Regional Demand - Investment in the mining sector is on the rise, particularly in Xinjiang and Tibet, where the demand for civil explosives is expected to increase due to ongoing coal and metal mining projects. The fixed asset investment growth in these regions is among the highest in the country [3][8]. - The civil explosives industry is projected to benefit from the ongoing construction of major infrastructure projects, such as the Yajiang Hydropower Station and the New Tibet Railway, which are expected to drive demand for explosives [3][8]. 4. Key Investment Targets - The report highlights key companies in the civil explosives sector, including Guangdong Hongda, Yipuli, Xuefeng Technology, and Gaozheng Explosives, which are well-positioned to benefit from regional demand growth and industry consolidation [8][4].