Key points of investment
The company released its 2023 mid-year report, and the results for the second quarter increased month-on-month? Looking at the first half of the year: 23H1 achieved revenue of 1.25 billion yuan, +23.9% year on month, +15.4% month on month; net profit of 130 million yuan, +3.0% year on year, +193.0% month on month; net profit minus 160 million, +17.4% year on year, +336.4% month on month; gross profit margin of 40.2%, -6.1 pct year on year, -2.5 pct.
Looking at a single quarter: 23Q2 achieved revenue of 790 million dollars, +60.9% year on year, +71.5% month on month; net profit of 120 million yuan, +74.5% year on month, +747.5% month on month; net profit minus 130 million, +82.7% year on year, +480.2% month on month; gross profit margin of 41.8%, -8.6pct year on year, +4.2pct.
Has the revenue of silver powder, tin powder, and lead powder 23H1 increased significantly? Looking at the first half of the year: 1) copper-containing silver powder: revenue of 220 million yuan, +79%, month-on-month, +9%; gross profit margin of 46%, year-on-year -1.6pct; 2) lead-containing silver powder: revenue of 120 million, +83%, +89% month-on-month; 3) tin powder: revenue of 270 million, +16%, +39% month-on-month; gross profit margin of 47%, -2.0pct; 4) zinc powder: revenue of 330 million, -11%, -20% yoy; gross profit margin: 36-10.6%, YoY t; 5) Lead powder: revenue of 140 million dollars, year-on-year + 37%, +55% month-on-month; gross profit margin 33%, year-on-year -2.9pct.
The company's strategy is clear, and major mine operations have improved markedly
The company actively responds to market changes, focuses on annual business plans and long-term development plans, increases resource reserves through mergers and acquisitions, and promotes progress in mine beneficiation technology through technical reform, laying the foundation for creating greater economic benefits. 1) Yinman Mining: 23H1 net profit of 140 million yuan, +0.3 billion; 2) Rongbang Mining: 23H1 net profit of 8.54 million, year on year +14.48 million, mainly due to factors such as increased production and higher grade of ore selection; 3) Xilin Mining: 23H1 net profit of 280,000, +12.72 million, mainly due to 23H1 mining of high-grade ore that has reached a recoverable state.
Yinman technical reform+Qianjinda selection and resumption of production. Looking forward to further growth in the second half of the year? Yinman Technical Reform: 1) The cassiterite flotation renovation project: Preliminary completion was in July. The tin recovery rate of Yinman Mining has increased from 50% to 60%, and will gradually increase to 70% in the future. 2) Raw ore disposal project: It is scheduled to be completed and put into use by the end of September 23. It is expected that the raw ore disposal rate will reach 20%-25%. It can save 25 to 32 million yuan per year in mineral processing costs and increase raw ore grade enrichment by 20%. The company expects a significant increase in the production of various types of metals in Yinman Mining in '23. Among them, tin metal production is expected to increase by more than 120%, which is expected to lead to an increase in performance.
Selection and resumption of production in Qianjinda: Affected by factors such as the construction of the second phase of the mining area, the Spring Festival holiday, and delays in the resumption of work, Qianjinda Mining's 23Q1 ore reserves were insufficient, which caused the processing plant to stop production, affecting the performance of the first half of the year. However, production resumed in the Qianjinda mining area on March 20, 23, and factory selection resumed production on April 1, 23. It is expected that business improvements will be achieved in the second half of the year.
Profit forecasting and valuation
The company has a clear strategic plan, promotes mining technology reform, and is expected to achieve rapid growth. We expect the company's net profit to be 1,001/17.92/2,468 billion in 23-25, an increase of 475.51%/79.03%/37.77%; the corresponding EPS is 0.54/0.98/1.34 yuan, respectively, and the corresponding PE is 15.25/8.52/6.18 times, respectively.
Risk warning
The Fed's interest rate hike exceeded expectations; mine resumption progress fell short of expectations; and the effects of mine technical reform fell short of expectations.