2023H1's net profit from parent increased by 45.2% year over year. 2023H1 achieved revenue of 70.8 billion yuan (+9.9%), net profit of 10.1 yuan (+45.2%), net profit of non-attributable income of 980 million yuan (+44.3%), net cash flow from operating activities of 3,944 million yuan (+57.3%). Among them, 2023Q2's quarterly revenue was 40.7 billion yuan (+14.7%), net profit attributable to mother was 532 million yuan (+11.1%), net profit of 533 million yuan (+74.3%) after deducting non-return net profit of 533 million yuan (+74.3%).

The year-on-year increase in profit was mainly due to asset impairment and a decrease in minority shareholders' profit and loss. 2023H1's gross profit was 2.7 billion yuan, down 400 million yuan from the same period last year, but in the first half of last year there was 350 million yuan in asset impairment and 530 million yuan in minority shareholder profit and loss. There was only 55 million yuan of asset impairment in the first half of this year, and minority shareholders' profit and loss decreased by 200 million yuan compared to the same period last year. This was mainly due to a decrease in net profit of non-wholly-owned subsidiaries in the current period compared to the same period last year and a decrease in minority shareholders' profit and loss after the acquisition of minority shareholders' rights in Diqing in the second half of 2022.

Sulfuric acid profits declined sharply. The company's revenue structure did not change much in the first half of this year, but the gross profit structure changed significantly. The gross profit of the sulfuric acid business in the first half of the year was 83 million yuan, while the profit for the same period last year was 930 million yuan, mainly due to low sulfuric acid prices in the first half of this year. According to iFind data, the sulfuric acid factory price of a copper smelter in 2022H1 in Jiangxi is 780 yuan/ton, the ex-price of 2023H1 sulfuric acid fell to 138 yuan/ton, while the cost of smelting acid is generally 120-150 yuan/ton. If demand for sulfuric acid is low, the sulfuric acid business is prone to losses.

The custodian controlling shareholder Toromocho copper mine. The company announced on June 17, 2023, that in order to avoid competition between China Mining International and the company's peers, China Copper plans to entrust 100% of the shares held by China Mining International to the company for management. China Mining International's core assets are the Toromocho copper mine in Peru. The mine has 12 million tons of copper resources and 244,200 tons of copper production in 2022, making it the top 20 copper mines in the world. Construction of the second phase of the project began in February 2018. After the expansion was completed, Toromocho produced 300,000 tons of copper.

Risk warning: There is a risk of a sharp drop in copper or sulfuric acid prices, and a reduction in mine production.

Investment advice: Maintain an “increase in holdings” rating.

Assuming that the spot price of copper in 2023-2025 is 68,000 yuan/ton, the TC of copper concentrate is 84 US dollars/ton, the price of sulfuric acid is 300 yuan/ton, the price of gold is 425 yuan/gram, and the price of silver is 5200 yuan/kg. The estimated net profit of Gimu in 2023-2025 is 21.55/22.10/2,322 billion yuan, with a year-on-year growth rate of 19.1/2.6/5.0%; diluted EPS is 1.08/1.10/1.16 yuan, and the PE corresponding to the current stock price is 11.0/ 10.8/10.3x Taking advantage of the boom in the copper industry in recent years, the company has improved asset quality and strong cash flow. It is expected that this year it will continue to benefit from rising copper concentrate processing fees and a rebound in sulfuric acid prices to the bottom, and maintain its “increase in holdings” rating.