The company is a comprehensive large-scale civilian explosion enterprise. The company has expanded into the engineering service market with the integrated commercial explosion business as the core, mainly providing specialized and integrated civil blasting services and general contracting services for greening and digitally intelligent mine construction for important domestic and foreign energy projects, infrastructure construction, large-scale mining projects, etc. The company's business covers about 20 provinces (autonomous regions, municipalities directly under the Central Government) and countries such as Namibia, Liberia, Pakistan, and Malaysia.
The company benefits from industry consolidation. 1) There have been important changes in the main business structure, in line with the development trend of the industry. The company's business structure has changed from the original production and sales of explosives equipment to mainly explosives engineering services. The share of the blasting service business has reached about 65%, which is in line with the industry's direction of encouraging and supporting the integrated development of civil bombing services. 2) Comprehensive optimization of asset conditions and light deployment to promote high-quality development. The divestment of non-main business assets related to the former Nanling bombing and related historical issues have basically been resolved, and the company has fully achieved high-quality operations. According to the company's disclosure in the first three quarters, the company's main operating indicators have increased significantly compared to before the restructuring. 3) The restructuring is integrated in an orderly manner, and management is more standardized and efficient. The company has achieved joint governance between central enterprises, local state-owned assets, academicians of the Chinese Academy of Engineering, experts and scholars, and enterprise executives, and enterprise executives to further enhance the effectiveness of corporate governance.
The company has responded positively to the national “Belt and Road” initiative. The company has accumulated rich experience in the international operation of integrated blasting services. The company gives full play to the advantages of central enterprises, grasps the country's “going global” development opportunities, responds positively to the country's “Belt and Road” initiative, closely follows the overseas projects of Chinese enterprises to carry out international business, and provides professional blasting engineering services for various hydropower projects and mining projects in Pakistan, Malaysia and other countries built by Chinese enterprises. The business has been deployed in Liberia, Pakistan, Namibia, Malaysia and many other countries along the “Belt and Road”. The level of international management and international competitiveness has been steadily improving.
The company focuses on major projects and focuses on key projects. 1) Gezhouba Yipuli, a subsidiary of the company, signed or began implementing new daily operation contracts for engineering construction in July-September 2023 totaled 8.185 billion yuan, an increase of 239.05% over the previous year. The contract service period described above is 5-30 years. 2) As the consortium leader, Gezhouba Yipuli Company, a holding subsidiary of the company, won the bid for the integrated construction and operation of mining and processing projects with an annual output of 40 million tons for mining and processing projects and logistics parks with an annual output of 40 million tons. Gezhouba Yipuli Company undertook the total contract amount corresponding to the construction content of about 11 billion yuan, and the total construction period of the project was 30 years.
Profit forecast. We expect the company's net profit from 2023-2025 to be 622 million yuan, 7.62 billion yuan, and 920 million yuan respectively. Referring to the valuations of comparable companies in the same industry, we gave 26 times PE in 2023 (1.76 times the corresponding PB), and the corresponding reasonable target price was 13.00 yuan. For the first time, coverage was given a “superior to the market” rating.
Risk warning. Macroeconomic cycles; production safety expectations; raw material price fluctuations.