广东宏大：民爆龙头，宏图大志

Investment Rating - The report initiates coverage with a "Buy" rating for Guangdong Hongda [8][9]. Core Views - The report highlights that the supply side of the civil explosives industry is constrained by policies, while demand is supported by growth in regions such as Xinjiang and Tibet, as well as along the "Belt and Road" initiative. The profitability is expected to recover as the main raw material, ammonium nitrate, is projected to decline slightly [3][8]. Company Overview - Guangdong Hongda is a leading integrated service provider in the civil explosives sector in China, initially focusing on large open-pit mines and expanding into underground mining after acquiring Hunan Lianshao Construction Engineering Co., Ltd. in 2013. The company has diversified into three main segments: civil explosives, mining services, and military products [5][17][21]. Industry Dynamics - Demand for civil explosives is expected to rise due to increasing prices of mineral products and a recovery in mining service demand. The compound annual growth rate (CAGR) for industrial explosives production in regions like Xinjiang and Tibet is projected at 21.1% and 26.0%, respectively, from 2017 to 2024 [6][49]. - The supply side is characterized by a lack of new capacity due to policy restrictions, leading to a market focused on existing resources. The concentration of market share among leading companies is increasing, with the CR10 market share rising from 44% in 2017 to 62% in 2024 [6][49]. Financial Performance - Guangdong Hongda's revenue and net profit have shown rapid growth, with a revenue of 11.54 billion yuan and a net profit of 720 million yuan in 2023. The company has achieved a revenue CAGR of 20.0% and a net profit CAGR of 41.6% from 2016 to 2023 [32][41]. Business Segments - The civil explosives segment has a production capacity of 580,000 tons per year, ranking second nationally. The mining services segment is the largest revenue contributor, with a revenue of 8.93 billion yuan in 2023, while the military segment is also expanding through acquisitions [7][29][36].