This report is read as follows:

The company's overseas expansion is smooth, and the tower aluminum project contributes gold and antimony production capacity; in the domestic Keyue project, the proportion of the company's precious metals business has increased, which will benefit from the performance flexibility brought about by the rise in precious metal prices.

Main points of investment:

For the first time, the overweight rating is given: the forecast company's EPS 0.70 to 0.85 in 2019-2021 is 1.07 yuan.

The company's capacity expansion and involvement in gold mining business, gold rise superimposed subsequent gold / silver ratio repair, the company's performance will benefit. Comprehensive comparable companies in the same industry, give the company a 19-year PE18 valuation, the target price of 12.6 yuan, the current space of 16%, for the first time to cover and give an overweight rating.

With the exploration and transfer of the Keyue project, the company's mining lines are expected to continue to grow. At present, the company's mineral products are mainly provided by domestic Zaxikang and Lawu mines in Tibet, with an annual mining capacity of 700000 tons, with a total output of 2.36 tons of zinc concentrate / lead-antimony silver ore / copper concentrate in the past 18 years, of which the amount of silver-bearing metal is about 80 tons. The company's domestic resources reserves of lead, zinc, copper, antimony and silver have reached 113.17 / / 2.54 / 15.39 / 1700 tons respectively. At present, the exploration and conversion work of the Keyue project is being carried out and is expected to be gradually put into production in the next two years. Based on the design capacity of 400000 tons, after reaching production, the company's zinc / lead / antimony / silver production capacity will increase by 10, 000 tons / 9500 tons / 3400 tons / 30 tons (metal), and the silver output is expected to reach 110 tons.

Overseas expansion is smooth, and the tower aluminum project contributes gold and antimony production capacity. The company acquired a 50% stake in Ta Aluminum Gold in December 2017 and obtained 132300 tons / 24.95 tons (metal) of antimony / gold rights and interests in Kangqiao Mining area, of which the gold grade is 2.17g / ton. At present, the mine is under close construction and production is expected to start in mid-2020. based on its annual designed mining capacity of 1.5 million tons, it is expected to provide the company with an annual production of 8000 tons of antimony / gold rights and interests. At present, the company has successfully issued convertible bonds to raise about US $100 million, which is used to replace the previous acquisition of Ta Aluminum (US $90 million) and provide loans to the other party (US $10 million). If the shares are converted later, the pressure on financial expenses will be greatly reduced.

Catalyst: the price of the company's products continues to rise, and the production capacity is completed ahead of schedule.

Core risks: production capacity, overseas mineral development progress is lower than expected