Core views
1. In 2023, the company achieved operating income of 186.3 billion yuan, +8% year-on-year; realized net profit of 8.25 billion yuan, +36% year-on-year. The net profit of 2023Q4 to mother was 5.81 billion yuan, +234% month-on-month.
2. In 2023, the company's copper production was 419,500 tons, up 51% year on year; according to the company's production guidelines, production is expected to increase to 520,000 tons to 570,000 tons in 2024, up 24% to 36% year on year. As TFM and KFM projects were put into production one after another, driving the company's copper production capacity to rise at an accelerated pace and gradually transformed into a production advantage. The company's copper production continued to record high, making it one of the fastest growing companies among the world's leading copper mining companies.
3. The TC of copper concentrate is at a new low, and ore tension is being transmitted positively to smelting, and the center of copper price gravity is expected to move upward.
occurrences
The company released the 2023 annual results report
In 2023, the company achieved total revenue of 186.3 billion yuan, +8% year-on-year; realized net profit of 8.25 billion yuan, +36% year-on-year. According to this estimate, 2023Q4 achieved net profit of 5.81 billion yuan to mother, +234% year-on-month.
Brief review
1. The company's copper production increased by 51% in 2023, and is expected to maintain a 30% increase in 2023 production: the company's copper production (metal volume, same below) is 419,500 tons (+51%), cobalt production 55,500 tons (+174%), molybdenum production 15,500 tons (+3%), tungsten production 0.80 million tons (+6%), niobium production 1.17 million tons (+3%), and gold production 18,771 oz (+16%).
2024 guidelines: copper production 520,000 tons to 570,000 tons (+24% ~ +36%), cobalt production 60,000 tons to 70,000 tons (+8% ~ +26%), molybdenum production 12,000 tons to 15,000 tons (-4% ~ -23%), tungsten production 0.65 million tons to 0.75 million tons (-6% ~ -19%), niobium production 0.90,000 tons (-5% ~ +5%), phosphate fertilizer production 1.05 million tons to 1.25 million tons (-10% ~ +7%).
With TFM and KFM projects being put into production one after another, the company's copper production capacity accelerated and gradually transformed into a production advantage. The company's copper production continued to record high, and is one of the fastest growing companies among the world's leading copper mining companies. Currently, the company has grown into the world's largest cobalt producer, close to the top ten copper producers in the world. According to the official account of Luoyang Molybdenum Industry, KFM copper production exceeded 14,000 tons in January 2024 and 15,000 tons in February, setting a new record for the highest ever since production was put into operation.
2. The increase in copper sales volume and the sale of Australian NPM copper and gold mines obtained investment income, resulting in a sharp year-on-month increase in the company's 2023Q4 profit. After reaching a settlement with the Democratic Republic of the Congo (Gécamines) on the TFM equity issue, the export of TFM copper-cobalt ore resumed in the second quarter of 2023, and mine-side sales increased significantly, but since trading companies need to go through land transportation and sea transportation to reach downstream customers, there is a certain logistics cycle. The Australian NPM copper-gold mine was sold in December 2023 and an investment return of US$252 million was achieved. The combination of the two led to a significant year-on-month increase in the company's 2023Q4 profit.
3. The TC of copper concentrate has reached a new low, and the pressure on ore is being transmitted to smelting. According to Glonghui, the March 13 meeting of large Chinese smelters uniformly cut the output of some loss-making factories to cope with the shortage of raw materials.
The latest spot TC for copper concentrate fell to 11.4 US dollars/ton, the lowest point in more than 10 years. The average cost in the smelting industry is 50 US dollars. Using this spot TC, the loss per ton is about 2,000 yuan/ton, including the revenue from smelting containing sulfuric acid. The rapid expansion of copper smelting production capacity far exceeds the increase in copper ore, and is the main reason for the decline in TC.
Looking ahead to the future market, production cuts at the smelting end will complete the transmission from intense copper ore to intense copper refining, compounded by peak season demand, and inventories will be rapidly eliminated. We expect there will be an excess of 22,000 tons of global refined copper supply and demand in 2023. The gap is expected to gradually widen in 2024-2026. In line with interest rate cuts and a weak dollar environment, the center of copper prices is expected to shift upward.
Investment advice: The company's net profit from 2024 to 2025 is estimated to be 11.6 billion yuan and 12.8 billion yuan, respectively. The PE corresponding to the current stock price is 12.64 and 11.45 times, respectively. Considering the company's position in the industry and low cost advantages, the company is given a “buy” rating.