Tianfeng Securities: Western Development Speeds Up Again, People on the Belt and Road Initiative Explode Opportunities to Welcome the New Era

The Zhitong Finance App learned that Tianfeng Securities released a research report saying that compared to the domestic market, countries along the “Belt and Road” are in a period of major development, are rich in mineral resources, and have extensive infrastructure construction and mining service blasting needs. Driven by domestic policies and overseas demand, there is plenty of room for civilian explosives to go overseas. Currently, the overseas business of domestic explosives enterprises has formed a certain scale and has a certain degree of competitiveness. Focus on Jiangnan Chemical, Yipuli, and Guangdong Hongda.

The main views of Tianfeng Securities are as follows:

The supply and demand pattern of the industry continues to improve, and leading enterprises continue to grow bigger and stronger

The share of the total gross domestic product of the top 10 enterprises in the bombing industry in '24 has risen to 62.47%, up 2.49 pcts from 23. The total blasting service revenue share of the top 10 companies in the industry increased by 2.73 pcts to 89.61% year over year. As the industry supply pattern continues to improve, industry concentration is expected to increase further.

From the demand side, fixed asset investment in the mining industry, which accounts for more than 70% of downstream demand, has been growing for 4 consecutive years. In 24, fixed asset investment in the mining industry increased 10.5% over the previous year. Prices of major mineral resources moved upward, driving capital expenditure in related industries upward, and mining demand continues to be booming; in terms of infrastructure, construction of the three major canal projects is about to commence, and investment in construction+planning projects exceeds 600 billion yuan, which may open up room for incremental demand from the explosion.

Looking at the western region as a whole, demand is strong, and hot highlights are prominent. Attention is paid to booming regions such as Xinjiang and Tibet, as well as overseas construction needs. It is recommended to focus on: Yipuli, Jiangnan Chemical, Guangdong Hongda, Jiangnan Chemical, Gaozheng Minbang, Poly Union, Huhua Co., Ltd., Cathay Pacific Group, etc.

Xinjiang: Coal mining is driving high growth in the civilian explosion and mining services market, leading domestic companies are focusing on the layout area

Coal resources are abundant. Raw coal production in Xinjiang was +18.4% year-on-year, continuing the double-digit growth trend. Xinjiang coal gradually got rid of the slow growth caused by previous restrictions on mining capacity, transportation capacity, etc., and Xinjiang will gradually change from a national coal strategic reserve base to a strategic development center. The bank estimates the current demand for explosives in the Xinjiang region at 676,000 tons, and predicts that the domestic bombing market may be close to one million tons by the end of the “15th Five-Year Plan.”

Furthermore, infrastructure construction such as the Xinjiang Railway will further boost demand from the civilian population in the country. As Xinjiang is actively promoting infrastructure connectivity and the construction of “three bases and one channel”, coal production capacity will continue to be released. The future market may be dominated by four companies: Jiangnan Chemical (which has the highest explosive production capacity in Xinjiang), Yipuli (the largest market share in the open pit mine drilling market, which is expected to reach 123,000 tons after increasing explosives production capacity), Guangdong Hongda (joining forces with local company Xuefeng Technology to expand its position in Xinjiang) and Poly Joint.

Tibet: Large-scale copper mining has accelerated, construction of the Yaxia Hydropower Station and railway construction have ushered in a period of expansion, and the regional boom continues to rise

Large-scale mining in Tibet has been accelerated, and the Julong Copper Mine will step up construction of the second phase of the 200,000 tons/day expansion project, aiming to be put into operation by the end of 25. The Juno copper project was approved, aiming to be completed and put into operation in June '26; in terms of infrastructure, according to the Tibet 14th Five-Year Plan, the Sichuan-Tibet Railway and the Xinzang Railway are being implemented at an accelerated pace, and the scale of the railway network will usher in a period of significant expansion. Furthermore, the Yaxia hydropower project has been approved, and the imminent commencement of the project may significantly boost demand for a civilian explosion in the Tibet region. Under the acceleration of large-scale mining and the commencement of construction of major projects such as the Sichuan-Tibet Railway and hydropower development in the lower reaches of the Brahmaputra River, competition in the region may focus on high-quality local explosion enterprises represented by Gaozheng Demon (an enterprise under the Tibet State-owned Assets Administration Commission) and Yipuli (hydropower project blasting, with construction experience and shareholder China Energy Construction advantages), Huhua Co., Ltd. (established Motuo branch to accelerate the business layout in Tibet), Guangdong Hongda (with outstanding mining service advantages), and has participated in infrastructure construction such as Yulong and Julong copper mines. Among the leading companies integrating mining services represented by (OK), etc. Overseas: Keep up with the pace of Chinese enterprises and accelerate the layout along the “Belt and Road” countries

Risk warning: Looking at economic fluctuations; industry competition intensifying; production safety risks, the calculation is somewhat subjective.