Event: The company released financial results for the first quarter of 2022 & 2023
Performance growth fell short of expectations. On the evening of April 26, 2023, Huayu Mining released its 2022 annual report and the first quarter report of 2023. In 2022, the company achieved revenue of 564 million yuan, a year-on-year decrease of 59.93%, mainly due to no trade business; the net profit of the mother returned to the mother was 150 million yuan, a decrease of 0.64% over the previous year; and net profit of the non-return mother was 171 million yuan, an increase of 28.29% over the previous year. In the first quarter of 2023, the company achieved revenue of 153 million yuan, an increase of 72.90% over the previous year, an increase of 1191.34% over the previous year; the net profit of the mother returned to the mother was 154.687 million yuan, an increase of 498.84% over the previous year, an increase of 80.48%; after deducting the net profit of the non-return mother, an increase of 184.556 million yuan over the previous year, an increase of 591.95% over the previous year and a decrease of 16.42% over the previous month.
Insist on turning antimony resources into highly identifiable quality resources
The lead-antimony concentrate and zinc concentrate business have made major contributions to the company. In 2022, the revenue of lead and antimony concentrate was 327 million yuan, down 24.16% from the previous year, accounting for 58.02% of total revenue. Its gross profit was 163 million yuan, accounting for 63.29% of total gross profit, and 49.91%, down 9.98 pct from the previous year; the revenue of zinc concentrate products was 205 million yuan, down 15.34% from the previous year, accounting for 36.31% of the total revenue, and its gross profit was 98 million yuan, accounting for 37.89% of the total gross profit, 47.74%, a year-on-year decrease of 13.85pct.
By the end of 2022, the amount of antimony resources that the company could control was 425,600 tons of antimony, including 161,000 tons of metal in China, and 264,600 tons of metal for the overseas investment project Ta Aluminum Gold. Later, with the new construction project in Tibet and the production of Taalu Gold Industry, the company will produce nearly 21,000 tons of metallic antimony every year, equivalent to 15% of the world's antimony metal supply, making it one of the world's important antimony concentrate manufacturers.
Mining projects continue to advance, and the future can be expected
Tower Aluminum Gold Project: Trial production was completed in April 2022, and production was officially put into operation in July 2022. Production capacity is currently climbing. The project will process 1.5 million tons of ore per year after delivery, producing 16,000 tons of antimony metal and 2.2 tons of gold ingots per year, which will significantly enhance the company's profitability and resilience to risks.
Mud Fort Gold Project: By the end of 2022, the Mud Fort Gold Mine, a subsidiary of Asia Pacific Mining, had gold resource reserves of 59.14 tons of metal. The overall design and production scale of the Mud Fort Gold Mine project is 1 million tons/year. In 2022, various pre-development and construction projects progressed smoothly. The project completed the tailings depot and landfill project filing, project land use planning, etc. Other work progressed normally according to the plan, and development and construction work can begin once conditions are met.
Profit forecasting
The company is expected to achieve operating income of 12.57/15.77/1,77/1,788 billion yuan in 2023/2024/2025, an increase of 122.74%/25.52%/13.35%, respectively; the net profit of the mother is 2.22/3.46/431 million yuan respectively, up 48.62%/55.38%/24.90%, respectively. The corresponding EPS is 0.40/0.61/0.77 yuan respectively.
Based on the closing price of 13.52 yuan on April 28, 2023, the corresponding PE corresponding to 2023-2025E was 34.18/22.00/17.61 times, respectively. First coverage, giving a “buy” rating.
Risk warning:
Macroeconomics fell short of expectations; downstream demand fell short of expectations; capacity construction fell short of expectations.