Core views:
Benefiting from the sale of copper stocks and the sale of NPM, the performance surpassed expectations. According to the company's financial report, revenue for 23 years was 186.3 billion yuan, +8% year-on-year; net profit to mother was 8.2 billion yuan, +36% year-on-year. Q4 revenue was $54.6 billion, +21% month-on-month; net profit to mother was 5.8 billion yuan, +234% month-on-month; net operating cash flow was 5.4 billion yuan, +307% month-on-month; balance ratio was 58%, down 5.3 PCT from the end of Q3.
The company's performance exceeded expectations, mainly benefiting from the sale of Australian NPM copper and gold mines at the end of 1.23; 2. KFM and TFM hybrid mines were put into operation, and copper sales volume increased 125% year-on-year to 390,000 tons. Meanwhile, at the end of '23, there were 140,000 tons of copper in stock, which has basically returned to normal levels.
Q4 Copper and cobalt production increased sequentially, and the five-year plan is exciting. According to the company's financial report, Q4's copper, cobalt, tungsten and molybdenum production was 126,800 tons, 18,267 tons, 2,070 tons, and 3,534 tons, respectively, up 14%, 2%, 10%, and -13%. The target production target for the next five years is 80-100, 9-10, and 25,000-30,000 tons of copper, cobalt, and molybdenum, respectively. The target production center will increase 128%, 71%, and 76% respectively over 2013. Expanding production on the basis of rich resource reserves will help enhance the company's value and is exciting.
Copper costs have declined slightly, and pressure on the tungsten-molybdenum and niobium-phosphorus sectors to reduce costs is evident. According to the company's financial report, the production costs of copper, cobalt, molybdenum, tungsten, niobium, and phosphorus were 3.45, 7.22, 27.35, 7.61, 18.50, and 0.26 million yuan/ton, respectively, up -0.2%, 35%, 25%, 13%, 10%, and -0.4%, respectively. The cost of the copper sector dropped slightly after production expansion, and the results are encouraging; since the tungsten-molybdenum sector does not contain tungsten, the cost increase is obvious; it is expected that the niobium-phosphorus sector can increase the recovery rate of niobium to achieve cost reduction.
Profit forecasting and investment advice: Give the company a “buy” rating. The company's 24-26 EPS is expected to be 0.49/0.52/0.53 yuan/share. Referring to comparable companies, we gave the company a 24-year PE valuation of 20 times, corresponding to a reasonable value of 9.84 yuan/share for A shares. According to the current AH premium ratio, the reasonable value of H shares was 8.08 HKD/share, giving the company a “buy” rating for A/H shares.
Risk warning. Uncertainty in the global economy brings uncertainty to metal prices; the scale of the trade business is large, and poor risk control may lead to large losses; production of major products falls short of expectations.