Compared to international peers, CGN Mining (01164) is in a relatively low position in terms of valuation.
The Zhitong Finance App learned that Anxin International released a research report stating that it initially gave CGN Mining (01164) a “buy” rating, with a target price of HK$1.58. Against the backdrop of the accelerated development of the global nuclear power industry and rising demand and prices for natural uranium, the company's natural uranium trading business volume is expected to increase with the trend, and future increases in equity production capacity will also help the natural uranium trading business. Combined with the increase in natural uranium prices, the profits of the participating Kazakh Uranium Mining Company have increased, and the company's overall performance is expected to grow rapidly in the future. Due to strict international regulations on natural uranium ore development transactions, etc., overseas companies have an advantage; in addition, overseas companies have a long history in the natural uranium industry and have a larger business volume; combined with the above factors, the company's valuation is relatively low compared to international peers.
Anxin International's main views are as follows:
Priority is given to CGN's internal market resources, and is more popular
Under China's current policy of actively developing nuclear power, CGN's nuclear power construction is growing steadily. It is expected that many new units will start construction and that new units will be connected to the grid every year. The gradual increase in the number of operating units further boosts the resource demand for natural uranium. The huge group demand provides sufficient downstream demand guarantees for the company's natural uranium production capacity; it is more popular in cooperation with international natural uranium producers.
The company participated in many high-quality natural uranium resources around the world to obtain investment income and equity production capacity
The company shares in many high-quality natural uranium ore resources around the world and has corresponding equity production capacity. Its participation in uranium mines in Kazakhstan has a cost advantage and the products are more competitive; in the future, the company's equity production capacity is also planned to increase to 1,800 tons of uranium in 2025. At the same time, the company successfully intervened in the PLS project of the Canadian high-grade uranium resource Fissionuranium. Research has now been completed, and the completion of future mine construction will further enhance the company's performance and equity production capacity.
The gap between supply and demand is gradually widening, and natural uranium continues to rise
Due to the previous low price of natural uranium, global exploration capital expenditure for newly developed uranium resources has gradually declined. At present, there is a certain gap between natural uranium production capacity and demand, which is mainly replenished by secondary supply. The supply and demand gap for natural uranium in the medium to long term is expected to gradually widen in the future due to various factors such as the end of secondary supply and the peak of production cuts and decommissioning of mining mines, sluggish investment in new mines, and grid-connected power generation of new units, etc., and the relationship between supply and demand will become more and more tight. Natural uranium prices are likely to continue their upward trend. Since 2023, the spot price has risen from $50+ per pound to $65+ per pound.
Risk warning: International natural uranium prices fluctuate, the development of the nuclear power industry falls short of expectations, exchange risks, the progress of uranium projects falls short of expectations, and the increase in uranium mining costs exceeds expectations.