The electronic detonator industry is ushering in an explosive period.
In December 2021, the Ministry of industry and information technology clearly gave the time node for the full use of digital electronic detonators: stop production before the end of June 2022 and stop selling other industrial detonators except industrial digital electronic detonators before the end of August 2022.
According to the data of "civil explosion first information", the cumulative output of electronic detonators in 2021 was 160 million, with a year-on-year increase of 39.7%. The proportion of the output of electronic detonators increased to 18%. Sun xutao, marketing director of Wuxi Saimi Kentuo Microelectronics Co., Ltd., told the securities times that it is expected that by the end of 2022, the market is expected to realize the comprehensive replacement of electronic detonators. By the end of the 13th five year plan, China's production license capacity of electronic detonators has reached 535 million. It is estimated that by 2024, China's production license capacity of electronic detonators will reach 1 billion.
Today, the "battle" for the production capacity of electronic detonators between listed companies continues, and the orders of upstream chip enterprises have begun to increase.
This huge market has also attracted strong attention from the capital market. Among them, Poly Union Chemical Holding Group Co.Ltd(002037) became the "brightest star". As of the closing on February 10, Poly Union Chemical Holding Group Co.Ltd(002037) has gained seven consecutive boards, with a cumulative increase of 94.86%. The stock prices of Shanxi Huhua Group Co.Ltd(003002) , Shenzhen King Explorer Science And Technology Corporation(002917) have also risen continuously recently.
electronic detonators will fully replace
In 2006, electronic detonators entered the Chinese market for the first time.
In June of that year, the upstream RCC Cofferdam of phase III of the Three Gorges project, known as the "first explosion in the world", was blasted, and the Three Gorges Project began to play a formal role in flood control. The 2534 detonators used in this blasting are all electronic detonators imported from aoruikai company.
"At that time, the price of electronic detonators was very high, close to $100 / hair." Sun xutao told the reporter of securities times · e company that under the encouragement of policies, Chinese detonator manufacturers have begun to develop electronic detonators and finally replace imported electronic detonators.
In the past few years, Chinese detonator manufacturers have continued to receive policy dividends.
In December 2018, 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", requiring local public security organs and competent departments of civil explosive industry to vigorously promote the application of electronic detonators in conjunction with relevant departments and industry associations to ensure the full use of electronic detonators in 2022.
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 further defined the time node for the full use of digital electronic detonators, that is, stop production before the end of June 2022 and stop sales of industrial detonators other than industrial digital electronic detonators before the end of August 2022.
Chinese detonator manufacturers, encouraged by policies, began to develop electronic detonators one after another, and finally replaced imported electronic detonators. According to the data of "civil explosion first information", the output of electronic detonators in 2020 was 117 million, a significant increase compared with 60 million in 2019, accounting for 12.24% of the total output of industrial detonators. In 2021, the cumulative output of electronic detonators was 160 million rounds, with a year-on-year increase of 39.7%. Electronic detonators accounted for 18% of the output of industrial detonators. "It is expected that by the end of 2022, other industrial detonators will be used up and will not circulate in the market." Sun xutao told the reporter of E company that the above documents will bring subversive changes to the whole industry.
According to the research report, the annual consumption of traditional detonators in the market is about 1 billion to 1.2 billion. Assuming 100% penetration of electronic detonators in the future, the market space of electronic detonators will reach 15 billion to 18 billion yuan at 15 yuan.
civil explosive enterprises compete for licensed production capacity
In recent years, China has made great efforts to resolve overcapacity by raising the threshold of security access, promoting restructuring and integration, and promoting industrial digital electronic detonators. In December 2021, Bian Mingyao, director and deputy director of the work safety department of the Ministry of industry and information technology, said at a press conference that 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, but the number of enterprises is still too large. The Ministry of industry and information technology will continue to promote enterprise restructuring and integration and reduce the number of production enterprises to less than 50.
The reporter of securities times · e company noted that the opinions on promoting the high-quality development of civil explosive industry issued by the Ministry of industry and information technology in November 2018 put forward the replacement proportion requirements for detonators in the detonating equipment industry: if ordinary detonators are transformed and upgraded to digital electronic detonators, replace the production capacity of ordinary detonators with that of digital electronic detonators according to the ratio of 10:1; For the demolition of the basic detonator production line, the replacement proportion of the demolished part of the production capacity shall be adjusted to 5:1; For the demolition of the whole detonator production line, the replacement proportion of the dismantled part of the production capacity shall be adjusted to 3:1; For the cancellation of production sites, the replacement proportion of part of the cancelled capacity shall be adjusted to 2:1.
It is also in this context that listed enterprises in China's civil explosive industry set off a wave of mergers and acquisitions, hoping to seize the share of licensed capacity of electronic detonators.
Poly Union Chemical Holding Group Co.Ltd(002037) (002037) in 2018, the company acquired 100% equity of Panjiang minbang, 94.75% equity of Kaiyuan blasting and 100% equity of Yinguang minbang; In December 2021, the company signed a contract to acquire 70% equity of Hebei satellite, which is the largest detonator manufacturer in Hebei Province, with a licensed production capacity of 113 million detonators, including 13 million electronic detonators.
Sichuan Yahua Industrial Group Co.Ltd(002497) (002497) said on the interactive platform that at present, the production capacity of electronic detonators is more than 50 million, and the production and sales volume is the first in China. "In the future, we will also actively respond to the requirements of the Ministry of industry and information technology, actively expand the production capacity of electronic detonators and continuously improve the market share".
Guangdong Hongda (002683) has a capacity of 80 million detonators, including 20 million electronic detonators. The production capacity of Jiangxi Guotai Group Co.Ltd(603977) (603977) industrial digital electronic detonator is 16.3 million rounds, and it is stated that it will add an electronic detonator production line in due time.
Hubei Kailong Chemical Group Co.Ltd(002783) (002783) said on February 10 that at present, the company has nearly 20 million non electric detonators and 38.6 million electronic detonators.
Shenzhen King Explorer Science And Technology Corporation(002917) (002917) currently has an annual production capacity of 167 million industrial detonators, of which the holding subsidiary Shandong shengshida has completed the merger and acquisition of Taishan civil explosive, becoming the largest detonator production enterprise in Shandong Province. The company said on the interactive platform that in addition to the existing capacity of 13 million digital electronic detonators, it is currently promoting the transformation of detonator production line and replacing the other ordinary detonator capacity with electronic detonator capacity, so as to realize capacity expansion and production expansion.
At present, the production capacity of digital detonators (003800000) is licensed.
Hunan Nanling Industry Explosive Material Co.Ltd(002096) is a backbone enterprise in China's civil explosive industry. The company has a production capacity of 28 million electronic detonators. In 2021, it wholly acquired yipuli, a civil explosive enterprise, and the licensed production capacity of industrial detonators will reach 284 million. The company said on the interactive platform that it is further increasing the production capacity of electronic detonators and optimizing the production capacity structure according to the industrial policies.
upstream chip orders increased
By the end of the 13th five year plan, China's production license capacity of electronic detonators had reached 535 million. There were 33 production enterprises that have obtained production licenses, of which 26 have been put into production.
According to the relevant spirit of market promotion and application of electronic detonators by the Ministry of industry and information technology, it is expected that China's production license capacity of electronic detonators will reach 1 billion by 2022.
While electronic detonator enterprises enjoy policy dividends, upstream electronic detonator chip (i.e. electronic delay module) enterprises also benefit from it. According to the analysis of insiders, the electronic detonator chip market will increase rapidly. It is estimated that the consumption of electronic detonators in China market will be about 1 billion rounds from 2023 to 2024. According to the unit price of electronic detonator chip of 5.5 yuan / piece, the local market is expected to grow rapidly to more than 5 billion in the short term.
At present, there are about 20 or 30 enterprises that research and develop, produce and sell electronic detonator extension modules in China. In terms of shipment volume and industry share, they mainly include Rongsi Sichuang (Beijing) Technology Co., Ltd., Guizhou Quan'an miling Technology Co., Ltd., Wuxi Wuxi Etek Microelectronics Co.Ltd(688601) (688601), Wuxi Shengjing Electronic Technology Co., Ltd. and Shanghai Kuncheng Electronic Technology Co., Ltd.
It is noteworthy that among these companies, Wuxi Etek Microelectronics Co.Ltd(688601) is the only A-share listed company at present. Wuxi Etek Microelectronics Co.Ltd(688601) said on the interactive platform that the company is one of the mainstream suppliers of detonator chips. Thanks to the national promotion policy on digital detonators, the demand for orders increased.
The reporter of securities times · e company learned that Wuxi Etek Microelectronics Co.Ltd(688601) started the research and development of electronic detonator chip from 2006, launched the first practical electronic detonator chip in 2010, achieved the export of chip modules and completed international certification in 2015, developed cost-effective and reliable modules in 2020, and shipped more than 10 million. Since then, Wuxi Etek Microelectronics Co.Ltd(688601) set up a holding subsidiary Wuxi Saimi Kentuo Microelectronics Co., Ltd. to promote the electronic detonator project.
Sun xutao, marketing director of Wuxi Saimi Kentuo Microelectronics Co., Ltd., told the reporter of the securities times · e company that at present, the annual production capacity of the company's electronic detonator chip is 30 million, and it is expected to increase to 50 million in 2022. "If the volume is relatively fast in June, we will further expand our production.". He said that thanks to Wuxi Etek Microelectronics Co.Ltd(688601) its own production capacity, the company has no problems in technology and material supply.
