With the support of the electronic detonator substitution policy, the civil explosive industry has also entered a period of integration and transformation. In order to solve the problem of overcapacity in the civil explosive industry, the Ministry of industry and information technology pointed out that the reorganization and integration of civil explosive enterprises should be continuously promoted. Relevant listed companies Poly Union Chemical Holding Group Co.Ltd(002037) (002037. SZ), Hunan Nanling Industry Explosive Material Co.Ltd(002096) (002096. SZ), Shanxi Huhua Group Co.Ltd(003002) (003002. SZ), Anhui Jiangnan Chemical Industry Co.Ltd(002226) (002226. SZ), Sichuan Yahua Industrial Group Co.Ltd(002497) (002497. SZ) and Guangdong Hongda (002683. SZ) want to win the knockout competition through capital M & A.
policy support electronic detonators will be fully replaced this year
In December 2021, the Ministry of industry and information technology issued the safety development plan for civil explosives industry in the 14th five year plan, which proposed to comprehensively promote industrial digital electronic detonators. In addition to reserving a small amount of production capacity for export or other permitted special purposes, the production of ordinary industrial detonators will be stopped before the end of June 2022 and the sales of ordinary industrial detonators will be stopped before the end of August 2022. In addition, the proportion of on-site mixed explosive production capacity should be further increased from 30% to 35%.
Previously, the Ministry of public security and the Ministry of industry and information technology issued the "notice on matters related to the implementation of the general rules for information management of industrial electronic detonators", which also required to vigorously promote the application of electronic detonators to ensure the full use of electronic detonators in 2022.
The output of electronic detonators in China has increased significantly in recent years. According to the data of China blasting equipment industry association, the output of industrial detonators in China in 2021 was 890 million, including 164 million electronic detonators, with a year-on-year increase of 40%. The proportion of electronic detonators in the output of industrial detonators increased from 12% in 2020 to 18% in 2021.
safety and cost reduction have become the most important reasons for the implementation of electronic detonators
On January 21, Shenzhen King Explorer Science And Technology Corporation(002917) (002917. SZ) pointed out in the investigation that compared with traditional ordinary detonators, electronic detonators have higher safety, stability and reliability; The chip of electronic detonator can reduce the comprehensive cost in large-scale engineering blasting.
At present, the application of electronic detonators is concentrated in mining and blasting fields such as coal and mines. According to the Shanxi Huhua Group Co.Ltd(003002) prospectus, the average selling price of the company's electronic detonators in 2019 was 19.97 yuan / round, Jiangxi Guotai Group Co.Ltd(603977) business data announcement showed that the average selling price of the company's industrial detonators in 2019 was 3.88 yuan / round, and the average selling price of electronic detonators was 17.29 yuan / round, In the first three quarters of 2021, the average selling price of the company's industrial detonators was 5.77 yuan / hair. According to the data of China blasting Association, in 2021, the Cr5 of digital electronic detonator is 48.83%, and the CR10 is 72.5%. It can be seen that although the unit price of electronic detonator is high, it can significantly improve the overall economic benefits in terms of project progress and delayed progress.
overcapacity to be solved, restructuring and integration of civil explosive enterprises continued to advance
For a long time, there has been a "small, low and scattered" production situation in China's civil explosive industry, and the industrial concentration is low. Under the background of accelerating the withdrawal of production capacity in coal mining and other industries and increasingly strict environmental protection regulation, there are regional and structural overcapacity in the production capacity of civil explosive industry and low utilization rate of industrial detonator capacity, which intensifies the vicious competition in the market, This has resulted in the expansion of losses in the industry. For a long time, the capacity utilization rate of the civil explosive industry has been in a low state. The capacity utilization rate of industrial explosives is 79% and that of industrial detonators is only 29%.
At present, the number of civil explosive enterprises has been reduced from more than 140 in the early stage of the 13th five year plan to 71. However, according to the "14th five year plan" formulated by the Ministry of industry and information technology, the civil explosive industry still needs to further "strengthen the body and thin the body", and the number of relevant enterprises should be reduced to less than 50, with the top ten in the industry accounting for no less than 60% of the total production. Bian Mingyao, deputy director of the Department of work safety of the Ministry of industry and information technology, also proposed to continue to promote the reorganization and integration of civil explosive enterprises when talking about the problem of overcapacity in the civil explosive industry.
Gf Securities Co.Ltd(000776) military industry analysts told the associated press that the overall direction of China's civil explosive industry policy is to promote restructuring and integration, adjust production capacity layout, optimize product structure and promote enterprise transformation.
related listed companies have also set off a wave of mergers and acquisitions
In November 2021, Hunan Nanling Industry Explosive Material Co.Ltd(002096) plans to acquire 100% shares of Gezhouba eply. If the two are successfully merged, Hunan Nanling Industry Explosive Material Co.Ltd(002096) will become the first in the industry. Hunan Nanling Industry Explosive Material Co.Ltd(002096) is a state-owned enterprise in Hunan Province. After the reorganization, the controlling shareholder of the company will become Gezhouba, and the indirect controlling shareholder is China Energy Engineering Corporation Limited(601868) (601868. SH), entering the sequence of central enterprises. The licensed explosive capacity of Hunan Nanling Industry Explosive Material Co.Ltd(002096) after the merger will increase to 560000 tons, and the industrial detonator will reach 284 million rounds. In particular, the proportion of its overall mixed explosive capacity will meet the requirements of the Ministry of industry and information technology.
Anhui Jiangnan Chemical Industry Co.Ltd(002226) has a licensed capacity of 360000 tons of industrial explosives, with a capacity utilization rate of 95.8%. Its production efficiency is at the forefront of the industry. It has completed the acquisition of 100% equity of northern blasting section under the Department of ordnance industry, 49% equity of Northern Mining Service Co., Ltd., and 90% equity of Guangxi jinjianhua civil blasting equipment Co., Ltd. If all relevant assets of ordnance industry group are injected, Anhui Jiangnan Chemical Industry Co.Ltd(002226) may surpass Hunan Nanling Industry Explosive Material Co.Ltd(002096) and become the first in the industry. At present, the five-year restructuring promised by ordnance industry group has just passed for more than a year, and the rise of Anhui Jiangnan Chemical Industry Co.Ltd(002226) in the field of civil explosives is worth looking forward to.
In December 2021, Guangdong Hongda announced that it planned to purchase 100% equity of Shengli minbang. However, it announced the termination of major asset restructuring on January 3, 2022. Previously, Guangdong Hongda has announced its plan to acquire 100% equity of Guangdong civil blasting equipment Co., Ltd. held by its parent company. At present, the company has completed the integration of 7 of the 8 civil explosive enterprises in Guangdong Province. At present, Guangdong Hongda has a licensed capacity of 462000 tons of industrial explosives, ranking second in China.
In December 2021, Poly Union Chemical Holding Group Co.Ltd(002037) acquired satellite chemical, the largest detonator manufacturer in Hebei Province, with an electronic detonator license and a production capacity of 13 million rounds.
Shenzhen King Explorer Science And Technology Corporation(002917) in the institutional research, it is pointed out that for the reorganization and integration of the civil explosive industry, on the one hand, the company integrates the industrial capacity resources to reflect the scale effect, on the other hand, it also effectively integrates the high-end intelligent equipment technology with the production field to realize the coordinated development of the whole industrial chain. The company's strategic goal is to enter the top ten in the industry. The company continues to strive to integrate the downstream resources of the industrial chain. At present, the company has 167 million industrial detonators. According to the policy, it will replace ordinary detonators with electronic digital detonators.
Gf Securities Co.Ltd(000776) analysts told the financial associated press that in the future, the concentration trend of China's supply leaders will be obvious, and the industry policy will be inclined to the top 10 enterprises. In terms of the market space of 601.8 billion yuan, the average consumption of electronic detonators is expected to reach 180-1.5 billion yuan in the future according to the market price of 601.8 billion yuan.
