The Zhitong Finance App learned that Anxin International released a research report saying that Xie Company, which is a shareholder of CGN Mining (01164) from January to December 2023, produced 2620.4 tons of natural uranium. The annual plan completion rate was 97.2%, an increase of 0.86% over the previous year, which is basically the same as in '22, and the company's overall production capacity is in line with expectations. 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 its natural uranium trading business. The bank is optimistic about the company's future performance growth trend and raised the target price to HK$2.25, giving it a “buy” rating.

The report's main points are as follows:

The company's annual natural uranium production is in line with expectations

In 2023, Xie Company, a joint venture owned by the company, produced 976.8 tons of natural uranium, and the other joint venture, Austrian Company, produced a total of 1,643.6 tons of natural uranium. The annual plan completion rates were 100.2% and 95.6%, respectively. Looking at the Q4 single quarter, the mines invested by the company produced a total of 680.2 tons of natural uranium, with a planned completion rate of 86.2% in a single quarter. Among them, the Xie company produced 286.9 tons of natural uranium, and the Austrian company produced 393.3 tons of natural uranium. The company's production in '23 was in line with expectations. The bank expects that in 24 years, if there is no problem with the supply of raw materials required for mining, the production capacity of the participating Kazakh mine is expected to reach 90% of the design capacity, and production capacity will be further released.

There is a mismatch between supply and demand in the industry, and prices will continue to rise in the future

The price of natural uranium ore has maintained an upward trend and has broken through 100 US dollars/pound U3O8 in January '24. The supply and demand relationship in the global natural uranium ore market is misaligned. Natural uranium producers are mainly located in Central Asia, Australia, and Africa, while nuclear power installations are mainly concentrated in Asia, Europe and North America. After the Fukushima nuclear accident, global uranium exploration progress slowed, leading to an imbalance between supply and demand, and the gap is expected to continue to widen in the future. Therefore, the price of natural uranium ore will continue to rise in the future, driven by the imbalance between supply and demand, further boosting the company's profit growth.