Main points of investment
The company's performance increased in the first half of the year and greatly in the second quarter. From January to June 2017, the operating income was 26.88 billion yuan, a decrease of 6.44 percent over the same period last year, the total profit was 334.0714 million yuan, an increase of 38.63 percent over the same period last year, and the net profit was 211.9589 million yuan, an increase of 28.62 percent over the same period last year. The company's revenue in the second quarter was 21.29 billion yuan, and its net profit was 111 million yuan, an increase of 373% over the previous quarter.
Rising prices contributed to the growth of the company's performance. In the first half of the year, the prices of copper, lead and zinc, which are the main products of the company, rose 28%, 32% and 57% respectively compared with the same period last year; gold and silver prices rose 8% and 17% respectively compared with the same period last year. In terms of output, the mine produces 73300 tons (12400 tons of copper, 10200 tons of lead and 50700 tons of zinc) and 197500 tons of copper, lead and zinc, 3622 kilograms of gold and 110tons of silver. The rise in product prices is the main reason for the company's performance growth.
There was a big increase in the second quarter compared with the previous quarter. In the second quarter, the company made a net profit of 111 million yuan, a month-on-month increase of 373%.
On the one hand, the company's revenue in the second quarter increased by 280% compared with the previous quarter, but the expenses were well controlled, and the business tax and additional fees decreased by 12% compared with the same period. On the other hand, the profit and loss of minority shareholders of the company was large in the first quarter and fell sharply in the second quarter, and the net income on investment also dropped sharply in the second quarter. This shows that the profitability of the company's own high-quality assets increased in the second quarter, and the cost control was good, resulting in a big increase in performance.
Be optimistic about the future development of the company. First, from the industrial level, copper, lead and zinc prices are in the stage of good profitability. There is still a shortage of lead and zinc concentrates, resulting in high prices, even in the case of substantial consumption of inventory, prices are still strong and rising. The increase in global supply of copper concentrate over the next two years is very limited, while the economic recovery has brought steady growth in demand and prices are bullish. Second, the company spends a lot of money on overseas gold business. In the first half of the year, the company supported first Gold to participate in the rights issue project of Span No.1, and supported Spanyi to acquire American still Water Mining Company, creating the ninth largest gold company and the third largest platinum metal company in the world. Third, the company relies on the two major shareholders of Gansu SASAC and CITIC Group, and has great potential for development.
Profit forecast and rating: the company is expected to achieve net profit of 391 million yuan, 511 million yuan and 670 million yuan respectively from 2017 to 2019, with an overweight rating of 164X, 126X and 96X for the previous share price.
Risk hint: risk of price fluctuation of non-ferrous metals; risk of overseas resources development