Leading domestic traders
CITIC Metals is mainly engaged in the trading business of metals and mineral products. It is a leading metal and mineral products trader in China. The types of trade mainly include ferrous metal products such as iron ore and steel, as well as non-ferrous metal products such as niobium, copper, and aluminum. Its main business models include import trade, re-export trade, and domestic trade. Among them, the company's niobium product sales business covers the vast majority of large and medium-sized steel companies in the country. The niobium product business has grown by leaps and bounds, ranking first in the country in terms of market share.
Cooperate strategically with well-known mines to ensure product supply. The company's annual iron ore trade volume exceeds 50 million tons, ranking among domestic traders all year round. In terms of resource acquisition, we have established long-term and stable cooperative relationships with world-renowned mining companies such as Rio Tinto, BHP Billiton, Anglo-American Resources, and Vale. In terms of sales channel construction, the company has basically achieved coverage of major domestic ports, established a customer base of large and medium-sized steel companies represented by Baowu Group, Hegang Group, and Shangang Steel Group, and formed a solid customer base.
The performance growth trend is good, and the future can be expected
In 2022, the company achieved revenue of 119.175 billion yuan, an increase of 5.64% over the previous year; net profit of 2,215 million yuan, an increase of 21.55% over the previous year; net profit of the non-return mother was 1,458 million yuan, down 8.63% from the previous year. Among them, the large increase in net profit stemmed from good sales of ferrous metal products and the rise in production capacity after the second phase of Ivanhoe's KK project was put into operation. Long-term equity investment income accounted for by the relevant equity method had a certain effect on net profit.
The company's revenue from January to January 2023 was 27.733 billion yuan, an increase of 8.28% over the previous year; it achieved net profit of 543 million yuan, an increase of 4.57% over the previous year; and realized net profit of 542 million yuan after deducting non-return mother's net profit, a year-on-year change of 71.73%.
Relying on the large platform of central enterprises to lead the state-owned trade circuit
The controlling shareholder of CITIC Metals is CITIC Metal Group, which directly holds 99.93% of the company's shares. The actual controller is China CITIC Group Co., Ltd. The company's business is mainly carried out through its subsidiaries. It has a number of subsidiaries, including Metals Hong Kong Investment, Metal Africa Investment, Metal Peru and Metals International Investment, which are responsible for the company's mineral resource development and international trade and transportation business in Brazil, Africa and Peru, respectively. This will provide strong support for the company to increase exploration and storage, resource ownership, industrial chain expansion, intensive procurement, mineral transportation, and cost reduction.
Foreign investment in well-known mines, etc., has greatly strengthened investment in niobium ore as a resource supply channel: the company is the exclusive distributor of CBMM, the world's largest niobium product supplier, in China, and has acquired 15% of CBMM's shares through an investment consortium formed with major domestic steel companies.
Copper investment: CITIC Metal Investment obtained 15% of Las Bambas's shares and 25.97% of the Canadian listed company Ivanhoe's shares, obtained offtake (underwriting) interests in Peru's Las Bambas copper project (one of the top ten copper mines in the world) and the KK project, and agreed that the company would receive 26.25% of the annual distribution ratio of Las Bambas of the mine and 50% of KK's production in the first and second stages (excluding specific quantities) of copper products.
A series of measures have greatly strengthened resource supply channels and established a significant competitive advantage in the non-ferrous metals trading industry.
Ivanhoe's core mining projects currently in operation are the KK Project, the Kipushi Zinc-Copper Project, and the Platreef Platinum Group Metal Mine Project, respectively. After the third phase is fully put into operation, the KK project will become the second largest copper mine in production in the world. The KK project officially started the first phase of copper concentrate production on May 25, 2021. In 2021, it produced 105,884 tons of copper-containing metals in the concentrate, far higher than the initial anticipated production guidance target of 80,000 to 95,000 tons. After the first phase is put into operation, it is expected to produce about 200,000 tons of copper per year. The second phase of the KK project, which processes 3.8 million tons of ore per year, was selected and put into operation 4 months ahead of schedule, and production was reached in April 2022. Since the second phase of the plant selection was put into operation earlier than originally planned, the KK project is expected to produce 290000 to 340,000 tons of copper-containing metal concentrates per year in 2022. Considering the scarcity of copper concentrates, putting the KK project into operation will bring the company great resource procurement advantages.
Profit forecasting
The company is expected to achieve operating income in 2023/2024/2025
1501.60/1846.97/221,636 billion yuan, up 26.00%/23.00%/20.00%, respectively; Guimu's net profit was 26.71/31.43/3814 billion yuan respectively, up 20.57%/17.66%/21.35% year-on-year respectively, and the corresponding EPS was 0.55/0.64/0.78 yuan respectively.
Based on the closing price of 9.70 yuan on May 9, 2023, the corresponding PE corresponding to 2023-2025E was 19.57/16.64/13.71 times, respectively. First coverage, giving a “buy” rating.
Risk warning:
Macroeconomics fell short of expectations; effects of supply-side disruptions; policy changes in overseas countries.