Core Viewpoint - Guangdong Hongda (002683) has a current order backlog of 35 billion yuan in its mining service sector, indicating a stable future release of business operations [1] Group 1 - The company is focused on its core business and aims to enhance internal management to reduce costs and improve efficiency [1] - The company is committed to increasing operational efficiency and market competitiveness [1]

Group 1 - The core viewpoint of the article is that Guangdong Hongda's mining service segment has a current order backlog of 35 billion yuan, indicating strong future revenue potential [1] - The company plans to continue focusing on its main business and improving internal management to reduce costs and enhance efficiency [1] - There is an emphasis on improving operational efficiency and market competitiveness as part of the company's strategic direction [1]

Investment Rating - The investment rating for the company is "Outperform" (maintained) [2] Core Insights - The company's Q3 2025 performance met expectations, with total revenue of 9.93 billion yuan for Q1-Q3 2025, representing a year-on-year increase of 42.5%, and a net profit attributable to shareholders of 1.75 billion yuan, up 60.4% year-on-year [7] - The mining service segment faced short-term pressure due to various operational challenges, but is expected to recover as production resumes at key projects [7] - The resource segment showed significant growth, with gross profit of 2.23 billion yuan for Q1-Q3 2025, a year-on-year increase of 156% [7] - The company has adjusted its profit forecasts for 2025-2027 due to rising copper prices, projecting net profits of 2.48 billion, 2.84 billion, and 3.36 billion yuan respectively for those years [7] Financial Data and Profit Forecast - Total revenue projections for 2025 are 12.96 billion yuan, with a year-on-year growth rate of 30.3% [6] - The expected net profit for 2025 is 2.48 billion yuan, with a corresponding PE ratio of 17 [6] - The company anticipates a gross profit margin of 35.8% for 2025, with a return on equity (ROE) of 22.6% [6]

Company and Industry Summary Company Overview - The company operates in the mining services sector, specifically focusing on mineral extraction and processing. Key Points and Arguments Financial Performance - Mining services revenue has seen a slow growth, with a year-on-year decline of approximately 13-14% in the first three quarters. However, gross profit margins improved in Q3, and the negative growth is expected to narrow for the full year [2][7] - The company reported a loss of 120 million yuan from the acquisition of an Australian company, and a loss of 65 million yuan from the Colombian project due to expense recognition. Additionally, a 21 million yuan impact from a loan was noted, all of which are considered one-time factors affecting overall profit [12] Production and Sales - In Q3, the company produced 5,100 tons and sold 5,600 tons of mineral resources at a cost of 4,660 yuan/ton. The Longxi mine produced 14,700 tons and sold 13,000 tons at a cost of 4,550 yuan/ton. The Lubanbi mine produced 4,600 tons and sold 5,600 tons, with a cumulative cost of nearly 9,000 yuan/ton for the first nine months [11] - The company expects the production capacity for the geological mine to reach 15,000 tons next year, with potential increases of 5,000 tons from the L mine, contingent on the production plan to be finalized by year-end [13] Project Developments - The company anticipates significant revenue from the K.K. mine if the water drainage and repair work are completed successfully by year-end, potentially leading to positive growth in the following year [2][8] - The Lubanbi project is expected to break even in Q3, with limited profitability anticipated post-technical upgrades in 2026. A new system is projected to be operational by 2027, significantly reducing costs and increasing output [9] Market Conditions and Risks - Recent global mining accidents have raised concerns about the risks associated with natural collapse methods. The company has implemented pressure balance control and remote operations to mitigate these risks, which have been recognized by project owners [5][6] - The company is aware that while natural collapse methods have cost advantages, the technical complexity may lead to cautious selection by international clients. However, interest from multiple project owners has been noted, indicating potential future business opportunities [6] Future Outlook - The company expects to achieve a monthly revenue of approximately 1 million USD from the subject examination project in Q4, potentially increasing to 1.8 million USD per month next year [7] - The Colombian project is projected to start contributing profits by 2028, with an expected annual output of around 20,000 tons of copper and over one ton of gold [3][16] Cost Management - The company anticipates that costs will remain stable, with the Lubanbi project’s costs expected to decrease to 6,000-6,200 yuan/ton post-technical upgrades. However, overall cost reductions may be limited due to inflation and rising labor and material costs [17] Technological Advancements - Future mining operations are expected to focus on deep mining, large-scale operations, mechanization, and automation. The company is actively developing technologies to support these advancements, aiming for a transition to more automated and intelligent operations [23][24] Additional Important Information - The company has faced some operational disruptions due to changes in local customs leadership, which temporarily affected sales but has since been resolved [4] - The company’s overall cost structure has shown a decline in cumulative costs for the first nine months of the year [11]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The company is confident in its future development, firmly committed to the strategies of military transformation and international expansion. It will continue to focus on its main business, optimize management, promote industrial mergers and acquisitions, improve asset quality, and strive to enhance performance [26][29]. 3. Summary by Relevant Catalogs 3.1 Research Basic Information - The research object is Guangdong Hongda, belonging to the mining industry, with a reception time of October 24, 2025. The listed company's reception staff includes Deputy General Manager and Board Secretary Zheng Shaojuan, and General Counsel and Investor Relations Director Zhao Guowen [16]. 3.2 Detailed Research Institutions - The research institutions include securities companies such as CICC, Huabao Securities, Guosheng Securities, and fund management companies such as Chuangjin Hexin Fund, Xingye Fund, as well as insurance agencies like Dajia Insurance. A large number of relevant personnel from these institutions participated in the research [17][18][19]. 3.3 Research Institution Proportion No specific proportion data provided. 3.4 Main Content Materials - **Performance in the First Three Quarters of 2025**: The company achieved an operating income of 14.552 billion yuan, a year - on - year increase of 55.92%; the net profit attributable to the parent company was 653 million yuan, basically flat compared to the same period last year; the cash flow from operating activities was - 236 million yuan, compared to 189 million yuan in the same period last year. The revenue growth was mainly due to the expansion of the mining service business and the consolidation of Xuefeng Technology. The slower growth of net profit was due to the relatively low gross profit margin of new projects and the decline in gross profit in some regions. The decrease in cash flow was due to slower collections or changes in payment methods [25]. - **Business Segments**: - **Mining Service**: The business scale is gradually expanding, focusing on key domestic regions such as Xinjiang, Tibet, and Inner Mongolia, and overseas along the "Belt and Road" countries. The current outstanding orders exceed 35 billion yuan and will continue to be steadily fulfilled [25]. - **Civil Explosives**: The production capacity has increased to 725,500 tons, with stable production capacity release and basically the same business scale as the previous year. Industry mergers and acquisitions are being actively promoted [25]. - **Defense Equipment**: The performance of hexogen is good. The acquisition of Dalian Changzhilin was completed at the end of September, and military trade projects are also being actively promoted [25]. - **Q&A Highlights**: - **Mining Service Gross Profit Margin**: The gross profit margin of the mining service segment in the first three quarters decreased year - on - year. This was mainly due to the low - margin new general contracting projects and the impact on gross profit in Xinjiang and overseas projects [26]. - **Overseas Mining Service**: The scale of overseas mining service projects in the first three quarters was basically the same as last year, with slower growth due to project closures. New projects in Congo (Brazzaville) are under construction, and new winning projects will contribute in the next year [27]. - **Accounts Receivable**: The increase in accounts receivable in the first three quarters was due to the consolidation of Xuefeng Technology and the expansion of the mining service business. The company will strengthen project settlement and cash collection [27]. - **Military Industry Acquisition**: The acquisition of Dalian Changzhilin will be reflected in the fourth - quarter financial statements, which is beneficial for product integration and improving the scale of assets, revenue, and profit in the defense equipment segment [28]. - **Overseas Explosives Production Capacity**: The Peruvian explosives factory is under expansion, and the Zambian explosives factory is under construction. Completion will promote business synergy and competitiveness in the local and surrounding areas [28][29]. - **Xinjiang Business**: The company expects the business scale in Xinjiang to continue to grow due to increased investment, new winning projects, and the region's strategic importance [29]. - **Tibet Business**: The mining service projects in Tibet, such as Julong Copper Mine, Yulong Copper Mine, and Baoxiang Lead - Zinc Mine, are operating well and growing steadily [29]. - **Mining Service Order Structure**: The outstanding orders in the mining service segment are mainly for metal mines, followed by coal and sand and gravel aggregates [29]. - **Civil Explosives Production Capacity Acquisition**: The company aims to achieve a production capacity of one million tons of civil explosives and will continue to promote mergers and acquisitions around rich ore areas [29]. - **Performance Outlook**: The company will focus on its main business, optimize management, and strive to improve performance in the fourth quarter and the whole year [29].

Investment Rating - The report initiates coverage with a "Buy" rating for the company, indicating a potential stock price increase of over 15% within the next six months [11]. Core Insights - The company achieved a record high in mining service revenue, with total revenue for 2024 reaching 13.65 billion yuan, a year-on-year increase of 17.6%. The net profit attributable to shareholders was 900 million yuan, up 25.4% year-on-year [1][3]. - The mining service segment generated revenue of 10.81 billion yuan, reflecting a 21.0% year-on-year growth, driven by increased investments in rich mineral areas and accelerated international expansion [1][2]. - The company has a robust order backlog exceeding 30 billion yuan, providing a solid foundation for future growth [1]. - The company is actively integrating and optimizing its explosive production capacity, having acquired controlling stakes in two companies to increase explosive production capacity by 82,000 tons per year [2]. Financial Performance - The company reported a comprehensive gross margin of 21.3% for 2024, an increase of 0.6 percentage points year-on-year. The net profit margin was 8.6%, up 0.16 percentage points [2]. - Forecasted revenues for 2025-2027 are projected at 21.71 billion, 24.71 billion, and 28.22 billion yuan, representing year-on-year growth rates of 59.05%, 13.80%, and 14.21% respectively [3][4]. - The earnings per share (EPS) are expected to be 1.58, 1.90, and 2.12 yuan for 2025, 2026, and 2027, with corresponding price-to-earnings (PE) ratios of 19.42, 16.14, and 14.49 [3][4]. Market Position and Strategy - The company's overseas revenue reached 1.36 billion yuan in 2024, a year-on-year increase of 43.7%, accounting for 9.9% of total revenue, up 8.1 percentage points [2]. - The company is investing in a new explosives factory in Zambia and has acquired a 51% stake in EXSUR in Peru to meet local mining project demands [2]. - The company is optimizing its explosive production capacity by relocating excess capacity to regions like Xinjiang and Tibet [2].