According to the Zhitong Finance APP, Northeast Securities released a research report stating that the civil explosives industry has multiple barriers such as production licenses, sales qualifications, engineering experience, and regional resources, with the industry's concentration continuing to rise. By 2024, the CR10 has reached 62.47%, exceeding the &#34;14th Five-Year Plan&#34; target. The proportion of mixed explosives has reached 37.9%, and the substitution rate of electronic detonators is 94%, with the acceleration of intelligent transformation. Policies indicate the promotion of civil explosive companies to actively participate in the &#34;Belt and Road&#34; initiative to increase international competitiveness.
<h2>Northeast Securities' main viewpoints are as follows:</h2>
The civil explosives industry has multiple barriers, making entry difficult
The upstream of the civil explosives industry consists of industrial explosive raw materials and production equipment supply; the midstream involves civil explosive products; and the downstream includes blasting services and mining services. The civil explosives industry has multiple barriers: 1) The production of civil explosive products is constrained by production licenses, with policies clearly stating that no new industrial explosives or detonator production capacity will be added, focusing on optimizing existing capacity rather than expanding; 2) The sales qualification of civil explosive products emphasizes the company's safety record and technical compliance capabilities, making it difficult for new companies to meet standards in the short term; 3) Companies need &#34;dual first-level qualifications&#34; to undertake quality downstream engineering blasting services, creating an experience barrier; 4) Local resource binding creates significant regional barriers.
Civil explosive policies continue to be introduced, promoting industry pattern improvement
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The concentration of civil explosive companies is increasing, with leading companies continuing to merge and acquire. In 2024, the total production value of the top 10 production enterprises in the industry reached 26.048 billion yuan, with the CR10 rising to 62.47%, achieving the target of CR10≥60% in the civil explosives industry's 14th Five-Year Plan ahead of schedule. Leading companies are actively merging and acquiring, with asset valuation levels showing a continuous upward trend. Potentially acquired civil explosive companies include: Yunnan Civil Explosives, Qianjin Civil Explosives, Zhejiang Lihua, Chongqing Shun'an, Aoxin Chemical, and Qinghua Civil Explosives.
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Mixed explosives are replacing traditional explosives, with the proportion expected to rise to over 35% by 2025. According to the China Blasting Industry Association, in the first half of 2025, civil explosive production enterprises produced a total of 789,700 tons of mixed explosives on-site, accounting for 37.9%, having already achieved the civil explosives industry's 14th Five-Year Plan target of over 35%. Considering the advantages of lower costs, lower storage fees, and higher safety of mixed explosives, the proportion is expected to continue to rise.
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Electronic detonators have multiple advantages, fully replacing traditional detonators. Electronic detonators offer safety, precision, and economic benefits. In the first half of 2025, the production of industrial detonators reached 309 million units, of which electronic detonators accounted for 291 million units, reaching a substitution rate of 94%, essentially achieving complete replacement.
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The civil explosives industry continues to promote intelligence and automation. The &#34;Implementation Opinions on Accelerating the Transformation and Upgrading of the Civil Explosives Industry&#34; proposed in 2025 aims for over 50% of enterprises to achieve a manufacturing maturity level of 3 by 2027, with a numerical control rate of key processes reaching 90%. By the end of 2027, all product production lines and on-site mixed explosives ground stations will achieve zero dedicated production equipment for Class 0; all processes on industrial explosive production lines with a danger level of 1.1 will have no fixed-position operators.
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Encouraging civil explosive companies to go global, with potential significant increments. The &#34;Implementation Opinions on Accelerating the Transformation and Upgrading of the Civil Explosives Industry&#34; launched by the Ministry of Industry and Information Technology in 2025 clearly states the promotion of civil explosive companies to actively participate in the &#34;Belt and Road&#34; initiative to increase international competitiveness
Core Targets in the Civil Explosives Industry
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Recommended: Yipuli, Guangdong Hongda; Companies not covered and not recommended for investment include Jiangnan Chemical, GZMB, Guotai Group, Yahua Group, Jinaobo, HUHUA, KAILONG, TOND.
Risk Warning: Fluctuations in raw material product prices; downstream demand not meeting expectations; policies not meeting expectations

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Dongbei Securities released a research report indicating that the barriers to entry in the civil explosives industry are high, and the industry's concentration continues to increase, with the CR10 reaching 62.47% in 2024. Policies are promoting civil explosive companies to participate in the "Belt and Road" construction, enhancing international competitiveness. The proportion of mixed explosives has reached 37.9%, with an electronic detonator substitution rate of 94%, and the acceleration of intelligent transformation is underway. Leading companies are actively engaging in mergers and acquisitions, improving the industry landscape, and it is expected that by 2025, the proportion of mixed explosives will exceed 35%

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Guotai Group

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Northeast Securities: The barriers to entry in the civil explosives industry are high, and the industry continues to promote intelligence and automation