Investment Rating - The report assigns a "Buy-A" investment rating to the company with a 12-month target price of 15.87 CNY, indicating a potential upside from the current price of 13.34 CNY [5]. Core Views - The company experienced a revenue decline of 6.03% year-on-year in H1 2025, with total revenue of 1.059 billion CNY and a net profit of 121 million CNY, down 11.14% year-on-year [1]. - The integrated civil explosives business is under short-term pressure, while the military new materials business is progressing steadily, with significant growth in contract orders for the subsidiary [1][2]. - The company is advancing its energetic materials project, with construction investment increasing by 60.57% to 264 million CNY, and the project is nearing completion with qualified products produced [2]. Summary by Sections Financial Performance - In H1 2025, the company sold 55,323.61 tons of industrial packaged explosives, a 2.29% increase year-on-year, generating revenue of 332 million CNY, while electronic detonators saw a 12.66% decrease in sales volume, leading to a revenue drop of 20.09% to 144 million CNY [1]. - The company expects net profits of 329 million CNY, 430 million CNY, and 542 million CNY for 2025, 2026, and 2027 respectively, with growth rates of 82.0%, 30.8%, and 26.0% [3]. Valuation and Comparables - The report compares the company with peers such as Guangdong Hongda, AVIC High-Tech, and Yipuli, with average PE ratios of 24 and 20 for 2025 and 2026 respectively [3]. - The company is projected to have a PE ratio of 23 for 2026, supporting the target price of 15.87 CNY [3]. Project Development - The energetic materials project is progressing well, with the construction of a production line capable of producing 3,000 to 4,300 tons of flexible energetic materials annually [2]. - As of June 2025, the project’s earthwork and slope engineering reached 99% completion, with the main production area and warehouse nearly finished [2].