CITIC Securities expects uranium prices to run high, and the company's performance is expected to continue to benefit.
The Zhitong Finance App learned that CITIC Securities released a research report stating that maintaining the CGN Mining (01164) “buy” rating, considering that the spot price of natural uranium may continue to operate at a high level, the company's future performance is expected to continue to reach new highs. Therefore, the net profit forecast for 2024-2025 was raised to HK$1,034/1,235 million (originally HK$8.26/11.32 billion), with a target price of HK$2.45. In 2023, the company's natural uranium equity production was 128,4.0 Tu, up 0.9% year on year; the natural uranium trade volume received by the company from suppliers and delivered to customers was 5355/6969 Tu, up 31.6%/59.3% year on year respectively.
The main views of CITIC Securities are as follows:
In 2023, the company's natural uranium equity production was 1,284 TU.
The mine invested by the company in 2023 actually produced 2620.4 tU of natural uranium. The planned completion rate was 97.2%, and the corresponding company's equity output was 1284.0 Tu, +0.9% over the same period last year. Xie Company produced 976.8 Tu of natural uranium, +1.8% over the same period. Of these, Xie Mine produced 407.4 Tu and Iraq Mine produced 569.4 Tu. The Austrian company produced 1643.6 Tu of natural uranium, +0.3% over the same period. Among them, China Ore produced 1512.9 Tu and Mining produced 130.7 Tu. The new block developed by the Austrian company in 2023 involves ore oxidation, and the mine is large and the acid consumption is high. Due to the shortage of sulfuric acid supply in Kazakhstan, the Austrian company was unable to complete the 2023 production plan; Xie Company has no acidification requirements for the new block yet, so it has not been affected to successfully complete the planned production volume.
The number of new contracts and deliveries for the company's international trade in 2023 all exceeded 5,000 TU.
According to the company's announcement, the company's new natural uranium procurement contract/delivery contract in 2023 was 5269/5423 TU, respectively, +24.5%/+40.5%; the trade volume received from the supplier and delivered to the customer was 5355/6969 TU, respectively, +31.6%/+59.3% year-on-year, respectively. The company's new contract and delivery trade volume increased on a large scale year-on-year in 2023. Among them, the 2023Q4 new natural uranium procurement contracts/delivery contracts were all 967 TU, and the weighted average prices were 75.40/72.67 USD/lb U3O8, respectively, +20.3%/+14.8% month-on-month; 2023q4 received and delivered to customers 1904/3159 TU, +108.3%/+218.8% month-on-month, and the weighted average prices were 57.33/53.46/lb U3O8, respectively.
The bank expects uranium prices to run high, and the company's performance is expected to continue to benefit.
According to UxC, the weekly spot price of natural uranium rose to 106 US dollars/pound U3O8 on January 22. According to the World Nuclear Energy Association, the world's installed nuclear power capacity will increase from 391 GW in 2023 to 686 GW in 2040, corresponding to the increase in global demand for uranium fuel from 65,700 tons in 2023 to 87,000 tons in 2040. The bank believes that global uranium supply will continue to be tight due to the continued slump in natural uranium exploration budgets, compounded by supply disruptions caused by the resumption of uranium production in Kazakhstan, Canada and other countries falling short of expectations. Under the premise that the tension between supply and demand is difficult to ease in the short term, natural uranium spot prices may continue to operate at a high level, and the company is expected to increase profits and continue to reach new highs.
Risk factors: the risk of large fluctuations in uranium prices; geopolitical risks; the risk that the Canadian PLS project will not be successfully put into operation; the risk that the company's production capacity expansion will fall short of expectations; the risk that mining production costs will continue to rise; the risk that Kazakh engineers will not be able to successfully pay compensation to the company.