Layout of overseas high-quality precious metal resources, platinum series metals will become the bright spot of the company's growth in the future. In the past few years, the company has actively distributed international high-quality precious metal mine resources, and the company has gradually transformed from lead and zinc to a company that attaches equal importance to both precious metals and base metals. First Gold, a wholly owned subsidiary of Baiyin Nonferrous, is rich in gold resources and is the largest shareholder of Sibanye Gold (Span I), the largest platinum group producer overseas, with a stake of 12.26%. After the acquisition of Lonmin, Span ranked first in the world in platinum production, second in palladium and rhodium output, and first in gold output.

A number of projects at home and abroad have been put into production, and the growth of mineral products has brought about a continuous improvement in performance. The company will put into production a number of new and expansion projects in the next two years. In 2020, the plant and dam 3 million tons / year mining and expansion project will be put into production, the company's mineral lead and zinc will nearly double, becoming the largest single mine in China, with an annual output of more than 200000 tons of lead and zinc. In the next two years, Peru's second phase of the 6.8 million-ton tailings comprehensive utilization project and the first gold Halfontein gold project will be put into production, and the output of lead, zinc, copper and gold will be further increased.

Gold and platinum prices continued to rise, while lead, zinc and copper prices rebounded at the bottom of the cycle. Loose global monetary policy has led to a continued decline in bond yields that is good for gold prices. At the same time, the risks of economic uncertainties such as trade frictions, geopolitics in the Middle East and the spread of the epidemic have increased the demand for gold as a safe haven in the international market. Gold production in supply may continue to decline in the future. The expansion of demand for hydrogen energy batteries is expected to drive platinum prices into a long-term upward cycle. Global automobile emission standards have been raised, and palladium prices have remained high and volatile. Although copper prices have been hit in the short term, supply is limited in the medium and long term, and global copper demand is driven by growth in emerging market economies. With the resumption of work in the short term, domestic demand has stabilized, countercyclical policies have significantly increased grid investment, and effectively increased the intensity of copper consumption. Lead and zinc prices are expected to rise after the bottom shock.

The company's performance will gradually improve in the next three years, the value of overseas assets will increase, and it will be given an "overweight" rating. The copper and gold output of the Changba lead and Zinc expansion Project, Peru Phase II Project and the first Gold Holfontein Gold Mine Project have continued to increase. We estimate that the return net profit of the company from 2019 to 2022 is 2.66,3.48,7.45 and 1.004 billion yuan. With reference to the comparable valuation of the company in the industry, coupled with the equity value of 6.84 billion Span, the reasonable market capitalization of the company is 25.5 billion yuan, which has 9% room for increase compared with the current market value.

It is worth noting that the future development of hydrogen energy market is expected to lead platinum metals to usher in a long-term upward trend, and the market value of Span equity held by the company has a broad space to rise. At the same time, against the backdrop of global exogenous shocks and increased economic pressure in the United States, global liquidity has increased, US Treasury yields have repeatedly hit record lows, and gold prices are expected to rise higher than expected. base metal prices benefit from domestic countercyclical stimulus policies are expected to rise higher than expected. The rising prices of major products bring additional valuation flexibility to the company. Cover for the first time, give "overweight" rating!

Risk hint: the price of copper and zinc has fallen sharply in the economic recession, and the development of hydrogen energy is not as expected.