Incident: The company released its annual report. In '23, the company achieved revenue of 186.269 billion yuan, an increase of 7.68%; net profit to the mother was 8.250 billion yuan, an increase of 35.98%, of which Q4 achieved revenue of 54.587 billion yuan, an increase of 21.42%; net profit to the mother was 5.807 billion yuan, an increase of 233.72%. The Q4 performance increased significantly, mainly due to the removal of copper products and the sale of NPM.
Two world-class copper-cobalt projects have been successfully completed, and the company's internationalization 2.0 is starting. As the TFM hybrid mine and KFM two new construction projects were completed and put into operation in 2023, the company's copper-cobalt production showed explosive growth. In 2023, the company produced 419,500 tons of copper and 55,500 tons of cobalt, up 51% and 174% year-on-year respectively. The company's copper production was close to the top ten in the world, making it the world's largest cobalt producer. At the same time, according to the company's plan, copper production is expected to exceed 500,000 tons in 2024, which is expected to rank among the top ten copper producers in the world. At the same time, cobalt production will continue to rise to more than 60,000 tons, continuing to maintain its leading position. Furthermore, 2024 is also the year Internationalization 2.0 begins. The company proposed development goals for the next five years, completed the goal of “moving to the next level” in the second step of the “three-step” strategy, and initially entered the ranks of world-class mining companies: achieving annual production of 80-1 million tons of copper metal, 90,000 to 100,000 tons of cobalt metal, 25,000-30,000 tons of molybdenum metal, and more than 10,000 tons of niobium; 2024 is the first year of the war, and the company's internationalization 2.0 is beginning.
Pursue profitable revenue, focus on reducing costs and increasing efficiency, and further enhance the company's global competitive advantage. For mining companies, cost is the core operating indicator. Cost reduction and efficiency is an eternal theme. In '24, the company will also set 30% to 40% for cost reduction and efficiency assessments to raise the cost awareness of all employees through policy guidance. At the same time, technological innovation is also the main theme of reducing costs and increasing efficiency. Even minor improvements in technical indicators will bring great economic benefits. For example, every 1 percentage point increase in the TFM copper recovery rate will bring benefits of 30 million US dollars; every 1 percentage point increase in Brazil's niobium recovery rate can increase revenue by about 6 million US dollars. The company has a strong technical research and development team, and has industry-leading technical advantages in comprehensive recovery and intelligent mining. In 2024, the company will lead the whole year with a “lean year”.
Profit forecast: We expect the company's EPS to be 0.47, 0.52, and 0.53 yuan respectively in 2024-2026, and PE will be 16, 15, and 14 times, respectively, giving the company 20 times PE in 2024, maintaining a “buy” rating.
Risk warning: Project progress falls short of expectations, capacity release falls short of expectations, metal price increases fall short of expectations