Event: when the company released its semi-annual report in 2023, 2023H1 achieved an operating income of 70.794 billion yuan, a year-on-year + 9.92%, a net profit of 1.01 billion yuan, a year-on-year + 45.21%, and a non-return net profit of 984 million yuan, + 44.31% over the same period last year. In a single quarter, Q2 company achieved operating income of 40.731 billion yuan in 23 years, + 14.7% year-on-year, + 35.5% month-on-month, and net profit of 532 million yuan, + 65.25% and + 11.1%, respectively.

The company's Q2 performance is in line with expectations. From a product point of view, 1) cathode copper: quantity increase and price decrease. 2023H1 company cathode copper revenue 55.076 billion yuan, year-on-year + 15.61%, revenue accounted for 77.8%; cathode copper business gross profit of 1.885 billion yuan, year-on-year + 530 million yuan; gross profit margin of 3.42%, year-on-year + 0.58pcts. In terms of volume, the production of copper concentrate contains 31200 tons of copper, which is basically the same as the same period last year; the production of cathode copper is 658700 tons, an increase of 6.44 percent over the same period last year. In terms of price, the average price of 23H1 copper is 679 thousand yuan / ton,-5.58% of the same period last year. 2) Precious metals: both quantity and price rise. 2023H1's revenue from precious metals was 6.629 billion yuan, + 0.69% year-on-year, accounting for 9.36% of revenue; gross profit of precious metals business was 347 million yuan, + 100 million yuan year-on-year; gross profit margin was 5.24%, year-on-year + 0.69pcts. In terms of volume, the company produced 9.80 tons of gold, an increase of 17.36 percent over the same period last year, and 401.49 tons of silver, up 28.12 percent over the same period last year. In terms of price, the average price of gold is 432.98 yuan / g, + 10.55% compared with the same period last year, and the average price of silver is 5264.6 yuan / kg, + 8.5% year-on-year. 3) sulfuric acid: a drag on the overall gross profit of the company. 2023H1 company sulfuric acid revenue 311 million yuan, year-on-year-75.23%, revenue accounted for 0.44%; sulfuric acid gross profit-82 million yuan, year-on-year-1 billion yuan; gross profit margin is-26.4%. In terms of price, sulfuric acid was in excess supply in the first half of the year, and the price showed a downward trend as a whole. The price of sulfuric acid dropped from 575 in 2022H1 to 130 yuan / ton in 2023H1 (excluding tax). In terms of volume, the company produced 2.3917 million tons of sulfuric acid, an increase of 9.34% over the same period last year.

Excellent ability of cost control. The expense rate of 2023Q2 during the period was 1.34%, which was reduced by 0.6pcts compared with the same period last year. Specifically, the sales fee is 0.16% → 0.17%, year-on-year + 0.01pcts; management expense rate is 0.97% → 0.53%, year-on-year-0.45pcts; financial expense rate is 0.57% → 0.44%, year-on-year-0.13pcts; R & D expense rate is 0.23% → 0.2%, year-on-year-0.02pcts.

Backed by Chinalco Group, extension and extension, copper holdings are expected to be further enhanced. In the second half of 2022, the company acquired a minority stake in Diqing Nonferrous (the equity ratio increased from 50.01% to 88.24%). At present, the company has Diqing Nonferrous Pulang Copper Mine, Yuxi Mining Dahongshan Copper Mine and other mines are mainly distributed in the Sanjiang metallogenic belt, with good ore-forming geological conditions and potential for further prospecting. During the reporting period, the company carried out mineral exploration activities and estimated that the amount of copper resources above the deductive grade would be increased by 24400 tons. By the end of June 2023, the company had 987 million tons of minerals and 3.707 million tons of copper, with an average grade of 0.38%. In addition, the company relies on Chinalco. In order to solve the problem of inter-industry competition, Chinalco International owns resources such as the Toromocho Copper Mine in Peru (with an annual refined copper production capacity of about 300000 tons).

Profit forecast: according to the company's disclosure, the company expects to produce 63300 tons of copper, 1.28 million tons of cathode copper, 12.2 tons of gold, 470 tons of silver and 4.92 million tons of sulfuric acid in 2023. In terms of price, we assume that the price of copper in 2023-2025 is 6.8pm 69pm 710,000 yuan / ton. It is estimated that from 2023 to 2025, the company will achieve an operating income of 1381.4 million yuan and a net profit of 2.2722 billion yuan, corresponding to an "overweight" rating of 11Compact 10X, respectively, with an operating income of 1381.4 million yuan and a net profit of 2.2722 billion yuan.

Risk reminder events: macroeconomic policy fluctuations, repeated epidemic situations, metal price fluctuations exceeding expectations, production safety inspection exceeding expectations, and the risk of not updating information in a timely manner.