The actual controller is the Hebei State-owned Assets Administration Commission: The actual controller of the company is the Hebei State-owned Assets Administration Commission, and the controlling shareholder is Hegang Group. It is mainly engaged in the mining, processing, and sales of copper, iron ore and vermiculite. The PC company is the main enterprise responsible for mining mineral resources.
Magnetite operation is steady, and the copper phase II production contribution is incremental: in 2023, the H1 magnetite/copper/vermiculite business achieved gross profit of 1,241/-0.08/154 million yuan, accounting for 89.34%/-0.58%/11.09%. The company currently stores 140 million tons of magnetite, high quality, low cost, and stable production and sales volume; in terms of copper business, copper phase I is expected to maintain a profit and loss balance. It is expected that phase II of copper can be partially put into operation in the 3rd quarter of 2023, entering a state of construction while production in 2024 or fully achieved in 2025. Production, copper can be produced at full production 70,000 tons, contributing 614 million yuan to the net profit of the mother.
Economic resilience is still strong, and copper and iron prices are strong: short-term iron ore inventory levels in Hong Kong are low, blast furnace operating rates are high, and prices are still expected to remain strong. The medium- to long-term steady domestic growth policy and capacity investment in overseas countries will further open up upward space; declining global copper resource quality and capital expenditure will limit the expansion of copper production, and new copper mine output may peak in 2023. Global inventories are still at a historically low level. The iterative transformation of energy may become a new driving force for traditional industrial metals such as copper.
Investment suggestions: We expect the company to achieve operating income of 54.48/72.80/9.352 billion yuan in 2023-2025, an increase of 7.81%/33.64%/28.47% over the previous year; net profit to return to the mother will be 801/11.20/1,711 billion yuan, respectively, an increase of 20.24%/39.76%/52.83% over the previous year.
Risk warning: The second phase of the copper project fell short of expectations; risk of falling copper and iron prices; risk of falling copper and iron prices; risk of political and natural disasters in South Africa; international trade risk; exchange rate risk, etc.