The silver faucet has a reserve of ten thousand tons. The company is mainly engaged in the mining and sales of non-ferrous metal ores, and its main products include silver ingots (national standards), gold, silver-containing lead powder and zinc powder. The company has six mining subsidiaries of Yindu Mining, Jinshan Mining, Everbright Mining, Jindu Mining, Dongsheng Mining and Deyun Mining, with silver resources reserves of about 10,000 tons and mining capacity of about 2 million tons, which is in the leading position in the industry.
The slowdown in interest rate hikes is accompanied by demand volume, and silver prices may rise. 1) in terms of financial attributes, on July 27, 2023, the Federal Reserve raised the federal funds target interest rate 25bp to 5.25-5.50%, which slowed down. Judging from the bitmap, most FOMC members expect future policy interest rates to continue to fall, and silver prices are more flexible than gold prices in the rise in precious metal prices brought about by financial attributes. 2) in terms of commodity properties, silver powder is the main raw material of photovoltaic silver paste. In 2021, the global output of photovoltaic cells in China accounted for 85.2%, while the market share of domestic positive silver paste was 61.0% in the same period. According to the forecast of China Photovoltaic Association, the domestic level of positive silver paste in China will rise to 80.0% in 2022. With the continuous expansion of domestic positive silver paste enterprises, it is expected that the current demand for silver will continue to be strong.
The mineral situation is superior, and the production capacity is expanded significantly. 1) in terms of mineral conditions, the company has a high position in geology and mining. The company's mining area is mainly distributed in the central and eastern part of Inner Mongolia and is a key area of large, super-large and even world-class non-ferrous metal deposits at home and abroad. The company's silver reserves are nearly 10,000 tons, and the mine service life is more than 10 years, which can support the company's long-term and stable operation, and has obvious resource advantages. 2) in terms of capacity improvement, the company currently controls 6 mining subsidiaries of Yindu Mining, Jinshan Mining, Everbright Mining, Jindu Mining, Dongsheng Mining and Deyun Mining. The company announced on May 18 that Jinshan Mining changed its mining license to increase the number of gold metals in mining, and the mining area increased from 5.5 square kilometers to 10 square kilometers. Dongsheng Mining Bayan Wula Silver Polymetallic Mine has planned an annual production capacity of 250000 tons and is currently carrying out preparatory work before construction. The lead-zinc polymetallic mine in Bayanbao District of Deyun Mining Co., Ltd. is currently going through the formalities of exploration and conversion.
Investment advice. With the increase in the scale of the company's main business and the upward silver price, it is estimated that the company's net profit from 2023 to 2025 will be 3.95,4.88 and 532 million yuan respectively. As of August 14, 2023, the company's closing price will be 13.3 yuan, corresponding to a valuation of 23.21,18.80,17.25 times in the next three years. Cover for the first time, giving a "buy" rating.
Risk tips: silver prices fluctuate sharply, the company's projects are not as expected, and environmental protection policies are stricter.