Summary of events: the company released its semi-annual report of 2023: 2023H1, the company achieved revenue of 2.362 billion yuan, down 15.6% from the same period last year; net profit from return to home was 381 million yuan, down 12.7% from the same period last year; and 383 million yuan was deducted from non-return net profit, down 12.2% from the same period last year. 2023Q2, the company achieved revenue of 1.222 billion yuan, a decrease of 0% over the same period last year, an increase of 7.2% over the same period last year, a net profit of 193 million yuan, an increase of 29.3% over the same period last year, an increase of 3% over the previous year, and a net profit of 196 million yuan, an increase of 31% over the same period last year and 4.4% over the previous year.
Comments: product sales fell short of expectations, interest income increased significantly
① volume: H1 sales fell slightly. 2023H1's magnetite sales were 2.7357 million tons, down 28.57% from the same period last year; copper 2023H1 sales were 9900 tons, up 12.5% from the same period last year; and vermiculite 2023H1 sales were 69300 tons, down 16.71% from the same period last year.
② price: commodity prices fell compared with the same period last year, and the company's gross profit margin decreased slightly. 2023H1, the average import price of iron ore in China is 114.5 US dollars / ton, down 10.3% from the same period last year. The average spot contract price for copper was 67878.58 yuan per ton in half a year, down 5.58 per cent from the same period last year. The company's 2023H1 gross profit margin was 58.82%, a year-on-year reduction of 8.66pct.
2023Q2, the company's gross profit margin is 58.16%, a year-on-year decrease of 2.3pct and a month-on-month reduction of 1.36pct.
The financial expense of ③ H1 Company was-187 million yuan, a decrease of 139 million yuan compared with the same period last year, mainly due to the increase in interest on bank deposits.
The core focus of the future: the cost advantage of iron ore is highlighted, and the production capacity of the second phase of copper will be released soon.
The construction of ① Copper Phase II continues to advance, and production capacity is expected to be further increased. The second phase of the copper project will be partially put into production in the third quarter of 2023 and completed in December 2024, with an annual production capacity of 70,000 tons of copper. The copper mine production and operation period can last for 15 years, which will continue to ensure the market influence and industry position of PC's copper products in South Africa and provide a stable profit guarantee for the company.
The cost advantage of ② iron ore is prominent. The company's magnetite is a concomitant product separated from the processing of copper ore. It has about 140 million tons of magnetite stored on the ground, with an average grade of 58%. At the same time, underground production will add magnetite products every year. PC only needs to carry out simple magnetic separation of magnetite to increase the grade of magnetite to 62.5% to 64.5%. The production cost of magnetite has great advantages compared with iron mines at home and abroad, which will contribute stable profits to the company.
The leading position of ③ vermiculite is stable. PC vermiculite mine, as the main vermiculite mining area in South Africa, is one of the top three vermiculite mines in the world. Vermiculite production accounts for about 1 / 3 of the global share. Due to the high grade and quality of PC vermiculite ore, PC and downstream vermiculite customers have established a strong supply relationship and long-term export supply of vermiculite to European and Asian customers.
Profit forecast and investment advice: the company's iron concentrate sales are expected to gradually recover, and copper minerals can be gradually released. We expect the company to achieve a net profit of 8.50 million yuan in 2023-25, corresponding to the closing price on September 5, PE is 13, 10 and 8 times, respectively, covering for the first time and giving a "recommended" rating.
Risk Tip: South African community risk, downstream demand is lower than expected, capacity is not as expected.