According to the Zhitong Finance APP, China Merchants Securities released a research report stating that the downstream hydropower project of the Yarlung Tsangpo River has officially commenced construction. China is vigorously developing hydropower along the Yarlung Tsangpo River, and the construction of hydropower dams will inevitably involve the civil explosives industry, which is expected to receive orders beyond expectations. The total investment for this project is approximately 1.2 trillion yuan, and it will construct five stepped power stations using a method of straightening bends and tunnel water diversion. The electricity generated will primarily be transmitted outside, while also considering local self-use demands in Tibet. This Yarlung Tsangpo hydropower project will significantly stimulate the demand for products and services such as explosives and detonators in the civil explosives industry, bringing unexpected orders to the sector.
<h2>The main viewpoints of China Merchants Securities are as follows:</h2>
Event
The groundbreaking ceremony for the downstream hydropower project of the Yarlung Tsangpo River was held on the morning of July 19 in Nyingchi City, Tibet Autonomous Region. The project mainly adopts the method of straightening bends and tunnel water diversion to construct five stepped power stations, with a total investment of approximately 1.2 trillion yuan. The electricity generated will primarily be transmitted outside, while also considering local self-use demands in Tibet. Recently, a new central enterprise, China Yajiang Group Co., Ltd., was established, with Zhang Guoqing, a member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, attending and unveiling the company.
Establishment of China Yajiang Group and the official commencement of the Yarlung Tsangpo hydropower project
According to Xinhua News Agency, the groundbreaking ceremony for the downstream hydropower project of the Yarlung Tsangpo River was held on the morning of July 19 in Nyingchi City, Tibet Autonomous Region. Li Qiang, Premier of the State Council and a member of the Standing Committee of the Political Bureau of the CPC Central Committee, attended the ceremony and announced the official commencement of the project. The project mainly adopts the method of straightening bends and tunnel water diversion to construct five stepped power stations, with a total investment of approximately 1.2 trillion yuan. The electricity generated will primarily be transmitted outside, while also considering local self-use demands in Tibet. Recently, a new central enterprise, China Yajiang Group Co., Ltd., was established. China is vigorously developing hydropower along the Yarlung Tsangpo River, and the construction of hydropower dams will inevitably involve the civil explosives industry, which is expected to receive orders beyond expectations.
The capacity scale of the civil explosives industry is strictly controlled
The civil explosives industry includes civil explosive products and blasting services, which consist of industrial explosives, industrial detonators, and industrial cords. Its downstream applications are mainly in mining, coal mining, road construction, and hydropower projects. The production capacity of industrial explosives in China is strictly regulated by policy, and in principle, no new production capacity will be approved, making the entry threshold for this industry relatively high, leading to stock competition. In 2024, the production of industrial explosives in China is expected to be around 4.49 million tons. The leading companies in terms of licensed industrial explosives capacity include: JIANGNAN CHEMICAL (770,000 tons), Guangdong Hongda (700,000 tons), Yipuli (570,000 tons), Poly United (460,000 tons), Yahua Group (260,000 tons), KAILONG (230,000 tons), Guotai Group (170,000 tons), Xuefeng Sci-Tech (120,000 tons), and Jinaobo (80,000 tons).
The Yarlung Tsangpo hydropower project will bring unexpected orders to the civil explosives industry
The Yarlung Tsangpo hydropower project will significantly stimulate the demand for products and services such as explosives and detonators in the civil explosives industry, bringing unexpected orders to the sector. The following companies are expected to benefit first: Yipuli's direct shareholder is Gezhouba Group, with the controlling shareholder being the State-owned Assets Supervision and Administration Commission, which has deeply participated in multiple large-scale water conservancy projects. The company is expected to leverage its project experience and shareholder advantages to deeply participate in the Yarlung Tsangpo hydropower project;
GZMB is a local civil explosives company in Tibet, with actual control by the State-owned Assets Supervision and Administration Commission of Tibet Autonomous Region. Its licensed production capacity for industrial explosives is 22,000 tons/year, and it is expected to benefit first due to its geographical advantages. JIANGNAN CHEMICAL is the largest enterprise in the domestic industrial explosives industry, with actual control by China North Industries Group, and is expected to participate in the Yarlung Tsangpo River hydropower project due to its scale advantages.
Risk Warning: Project progress may be slower than expected, and the price of explosive raw materials may rise

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China Merchants Securities released a research report stating that the downstream hydropower project of the Yarlung Tsangpo River has officially commenced, which is expected to stimulate demand in the civil explosives industry and bring in unexpected orders. The total investment for the project is approximately 1.2 trillion yuan, with the construction of five stepped power stations, primarily to meet electricity export and local demand in Tibet. The newly established China Yajiang Group Co., Ltd. is participating in the project, and the groundbreaking ceremony was held on July 19 in Nyingchi, Tibet

Zhitong

KAILONG

JIANGNAN CHEMICAL

Guotai Group

GZMB

Xuefeng Sci-Tech (Group)

CITIC Securities: The Yarlung Tsangpo River Hydropower Project has commenced, and the civil explosives industry will benefit significantly