Main points of investment
Performance summary: the company released the three-quarter report of 2023, with operating income of 3.984 billion yuan in the first three quarters of 2023, an increase of 6.11% over the same period last year; net profit of 667 million yuan, an increase of 61.36%; and net profit of 673 million yuan, an increase of 62.09% over the same period last year. Among them, the company realized operating income of 1.623 billion yuan in the third quarter, an increase of 69.63% over the same period last year; net profit of 286 million yuan, an increase of 1332.79% over the same period last year; and net profit of 290 million yuan, an increase of 1467.60% over the same period last year.
The volume and price of iron ore business has risen, and 2023Q3's profit has improved significantly compared with the previous month. 2022Q4-2023Q3, the net profit of the company was 253 million yuan, 188 million yuan, 193 million yuan and 286 million yuan respectively, while the net profit of 2023Q3 company increased by 48.19% month on month. The company's Q3 earnings improvement is expected to mainly benefit from the increase in iron ore shipments. Iron ore plate: volume: Q3 as the impact of the local disaster in South Africa gradually dissipates, the company's iron ore sales are expected to increase month-on-month; price: 2023Q32 62% taste iron ore Platts price index average price is 114.03 US dollars / ton, month-on-month increase 2.92% X 58% taste iron ore Platts price index average price is 98.15 US dollars / ton, an increase of 3.64%. Iron ore business sales and selling prices continued to rise, promoting the company's steady growth. Copper plate: the company's copper project is currently in the transitional phase of phase I and phase II, although part of the phase II project has been trial-produced, but the output is relatively small, so it is difficult to contribute significant profits in the short term; vermiculite plate: the company's PC vermiculite mine is the world's main supplier of high-end vermiculite, and the supply relationship is relatively stable, so it is expected that Q3 vermiculite performance profit fluctuation is small. Overall, 2023Q3's profit improvement mainly benefited from the rise in volume and price in the iron ore business.
The profit of the iron ore business is expected to remain at a high level. Parabola Copper Mine is a copper-iron associated mine, which mainly uses copper resources in the historical production process. Magnetite is stored on the ground of the plant after simple screening. At present, the stacking capacity is about 140 million tons, with an average grade of 58%. The company's average annual magnetite shipment is about 8.5 million tons, magnetite storage can be sold by the company for more than 17 years, and the development potential is huge (after the second phase of copper project was put into production, 2 million tons of new ground storage has been added every year. The average taste is 62%. At present, domestic hot metal production remains high, while the increment of global iron ore supply is low in 2023, iron ore shows a "high demand, low inventory" situation, iron ore prices are expected to remain high, thickening the company's profits. We assume that the average sales price of magnetite in 2023 is US $106.33 / ton, the cost per ton is US $65 / ton, and the shipment volume is 7.5 million tons, then the magnetite business is expected to contribute 879 million yuan to the company's net profit in 2023.
The gradual expansion of the second phase of the copper project is expected to increase the company's profits. The design capacity of the second phase of the copper project is 70,000 tons / year. Part of the trial production of the project was announced at the end of September 2023 and is expected to be completed by the end of 2024. Assuming that the capacity climbing period is one year, the second phase of the copper project is expected to achieve full production in 2026. Assuming that the full cost of the second phase of the copper mine is 35,000 yuan / ton, and the product price refers to the electrolytic copper price of 65,000 yuan / ton (about 57500 yuan / ton after tax deduction), considering that 28% of the resource income tax in South Africa and PC's net profit are converted into 59.2% of the company's net profit, it is expected that the copper mining business will contribute 672 million yuan to the company's parent net profit every year.
Profit forecast and investment advice: as the copper phase II project is gradually put into production and iron ore prices remain at a high position, the company's performance is expected to achieve sustained growth. We estimate that the return net profit of 2023-2025 company is 9.41,13.11 and 1.652 billion yuan respectively, the EPS is 1.44,2.01,2.53 yuan respectively, and the closing price on October 30 is 11.5,8.3,6.6 times of PE respectively.
Risk tips: copper Phase II project production / climbing schedule is not as expected, iron ore prices decline risk, sea freight prices rise sharply, and so on.