Investment points: the company is one of the main operators of smelting and processing in the domestic molybdenum industry. The company is mainly engaged in the production, processing and sales of molybdenum series products such as molybdenum furnace charge, molybdenum chemical industry and molybdenum metal, and has the integrated production capacity of roasting, smelting, molybdenum chemical industry and molybdenum metal deep processing. At the same time, it has certain mining rights and exploration rights (not yet developed on a large scale). Belongs to the domestic molybdenum iron "ten thousand tons club" one of the top three, compared with Luo molybdenum shares and gold molybdenum shares, the biggest deficiency of the company is that the resource self-sufficiency rate is low. In 2011, the company sold 14400 tons of ferromolybdenum, 1739 tons of roasted molybdenum concentrate, 522 tons of ammonium molybdate, 453 tons of high purity molybdenum oxide and 286 tons of molybdenum metal. Due to the continuous decline in molybdenum product prices in recent years, the comprehensive gross profit margin has declined, which is 6.85%, 6.26% and 6.04% respectively from 2009 to 2010.
Molybdenum demand is expected to return to a certain growth in the medium and long term, so as to improve the company's capacity utilization. In the short term, the downturn of the iron and steel industry at home and abroad will continue to suppress the demand for molybdenum metal, but in the long run, driven by the improvement of downstream industries such as automobile, machinery, petrochemical and so on, China's special steel industry is expected to maintain an average annual growth rate of 12% by 2015. Corresponding to the molybdenum metal growth rate of 7%, 9%, so as to improve the current global molybdenum metal supply surplus situation, to support the molybdenum price. The company invests molybdenum and copper mines in Jilin and Jilin provinces, which have obvious advantages in reserve-output ratio, or are supported by national policies; the capacity utilization of molybdenum products is expected to be improved, so as to achieve connotative growth.
Fund-raising projects will increase resource self-sufficiency and improve profitability. The funds raised by the company are mainly used for the mining project of Jilin Molybdenum and Copper Mine. Two years later, the production capacity of 3215 tons of molybdenum concentrate (containing 45% molybdenum) will be formed, when the company's resource self-sufficiency rate will reach about 13%. Compared with similar integration companies Luomo shares (self-sufficiency rate 90%, gross profit margin 36%) and gold and molybdenum shares (self-sufficiency rate 96%, gross profit margin 17%), the company's current gross profit margin is expected to increase significantly. The company is expected to produce 1000 tons of molybdenum concentrate in 2014 and 3200 tons in 2015.
Risk revelation. The company's main risks come from fluctuations in molybdenum prices and lower-than-expected demand in the steel industry.
We estimate that the fully diluted EPS of the company for 12-14 years is 0.33 soybean 0.46 million 0.59 yuan (implied 12-14-year molybdenum concentrate tax-free price assumption is 71538 pound 80769 pound 86538 yuan / ton respectively). Due to the company's large smelting capacity and low resource self-sufficiency rate, we think that there should be a partial discount on the valuation, we give the company a valuation range of 20-22 times, and then consider that the inquiry itself should have a partial discount. The proposed inquiry range is 5.61-6.17 yuan.
