23H1 returns to its mother with a net profit of 540 million yuan, maintaining the "overweight" rating.

The company's 23H1 realized revenue of 37.208 billion yuan (yoy+3.88%) and net profit of 540 million yuan (yoy-36.34%); 23Q2 realized revenue of 20.425 billion yuan (yoy-3.25%,qoq+21.70%) and net profit of 220 million yuan (yoy-57.35%,qoq-31.21%). We maintain our profit forecast and expect the company to make a net profit of 1.463 billion yuan in 23-25. Comparable company Wind unanimously expected the average PE (23e) to be 19.1 X, giving the company 23 years 19.1 XPEGe 23 years company EPS 0.34 yuan, with a target price of 6.47 yuan (previous value 5.26 yuan) to maintain the overweight rating.

The output of lead and zinc concentrate decreased slightly, while the output of smelting products increased obviously. 23H1 produced 134100 tons of lead and zinc concentrate metal (yoy-1.54%), of which domestic mining enterprises produced 82800 tons of lead and zinc concentrate metal (yoy-11.44%); a total of 215200 tons of smelting lead and zinc series (yoy+27.64%) The production of cathode copper / industrial sulfuric acid / sulfur / crude copper / silver / gallium / germanium concentrate contains germanium of 192100 tons / 937900 tons / 19600 tons / 800t / 60 tons / 8.67t / 8.13t respectively. 23H1's gross profit margin decreased by 0.21pct to 4.40% compared with the same period last year, but the home net profit rate decreased by 0.92pct to 1.45%, mainly due to an increase in the expense rate during the period compared with the same period last year. 0.45pct, in which the increase in financial expense rate is mainly due to the increase in interest expenses due to the expansion of loans.

Lead and zinc is the basic plate, and the industrial chain is complete.

The company's main business is lead, zinc mining, smelting, deep processing. According to the company's "Shenzhen Zhongjin Lingnan Nonferrous Metals Co., Ltd. 2023 follow-up rating report", at the mine end, by the end of the 22nd, the company had retained metal resources of 6.93 million tons of zinc, 3.26 million tons of lead, 6012 tons of silver and 1.26 million tons of copper. the main mines include Fankou lead-Zinc Mine, Guangxi Panlong Mine, Brocken Mountain lead-Zinc Mine in Australia and Maimeng Zinc Mine in Dominica, with an annual production capacity of about 300000 tons of lead and zinc. And the mining and separation project with an annual output of 2 million tons of Maimeng Mine in Dominica is expected to be put into production in 2024. At the smelting end, the company has Shaoguan smelter and Danxia smelter; in addition, the company also distributes new materials to carry out aluminum products and battery zinc powder business.

Participate in Fangyuan non-ferrous and other restructuring investment, enter the copper smelting plate

According to the company's "Shenzhen Zhongjin Lingnan Nonferrous Metals Co., Ltd. 2023 follow-up rating report", in August 2022, the company participated in the restructuring investment of 20 companies, including Fangyuan Nonferrous Metals, with a total investment of 3.605 billion yuan, and the company has completed a cumulative capital contribution of 1.071 billion yuan, and formally took over the restructuring enterprise in 2023Q1, fully leading the production management operation of copper smelting enterprises. The annual production capacity of colored cathode copper is 700000 tons, and the usable capacity is 400,000 tons / year. After the project of mining and dressing with an annual output of 2 million tons is completed and put into operation, the copper smelting capacity can be matched with the copper resources of the Maimeng mine in Dominica. The company entered the copper industry through restructuring investment.

Risk hint: downstream demand is not as expected, new projects are put into production, climbing progress is not as expected, and so on.