Summary:

According to Jintian Copper's letter of intent, the company's IPO expects to raise 1.5027733 billion yuan, offering underwriting and other expenses totaling 82.3267 million yuan, totaling 1.5851 billion yuan. In the audited 2019 annual report, the net profit attributable to the owner of the parent company is 415.434 million yuan after deducting non-recurring profits and losses, and the diluted EPS is 0.29 yuan. It plans to issue 242 million shares, which is calculated at a price of 6.55 yuan per share based on the total amount of capital raised, and the corresponding PE is 22.97 times.

Corresponding to China Securities Industry (C32) nearly a month static PE is 28.67 times, Jintian Copper's fund-raising price corresponding to the PE is lower than the industry PE, do not consider the postponement of the offering, Jintian Copper IPO is expected to be 6.55 yuan.

Jintian Copper is the leading copper processing enterprise in China, with more than 30 years of experience in copper processing and recycled copper production and utilization, and is one of the largest copper processing enterprises in China. it is also one of the important producers of sintered NdFeB magnets. The output of copper processing materials ranked first among similar enterprises in China from 2014 to 2017, with a market share of 5.2% in 2018. The company's electromagnetic wire products have an annual output of 97500 tons in 2019, and are still growing steadily, and have obvious competitive advantages in the industry.

The share of the company's main business income from 2017 to 2019 was 259.5, 329.6 and 36.53 billion yuan, with a three-year compound growth rate of 18.6%. In the future, with the continuous improvement of the self-sufficiency rate of recycled copper in China, the shortage of copper resources in the upstream will be greatly alleviated. At the same time, due to the increase in the growth rate of the downstream new energy vehicle industry, there is room for further increase in copper consumption.

Taking into account the disclosure of the prospectus and the above analysis, we choose Hailiang shares (002203.SZ), Chujiang New Materials (002171.SZ), Jingda shares (600577.SH) and 601137.SH Alloy as comparable companies with an average price-to-earnings ratio of 18.32 in 2019. According to the reverse calculation of the amount of capital raised in the prospectus, Jintian Copper's offering price is 6.55 yuan, corresponding to 22.97 times the return net profit PE in the 2019 annual report. Jintian Copper's valuation is lower than the industry PE and higher than the average PE of comparable companies, and the offering is not expected to be delayed.

It is estimated that the total share capital after the issue will not exceed 1.457 billion shares, and the market value after the issue is estimated to be 9.543 billion yuan.

Risk hints: (1) the release pace of IPO is delayed by force majeure, and (2) the slow macroeconomic recovery slows down the growth of downstream customer demand.