Incident: The company released its 2023 annual report on March 22. In 2023, the company achieved revenue of 186.269 billion yuan, up 7.68% year on year; net profit to mother of 8.250 billion yuan, up 35.98% year on year; realized net profit without return to mother of 6.233 billion yuan, up 2.73% year on year; achieved basic earnings per share of 0.38 yuan, a significant increase of 35.71% year on year. Overall, in 2023, the company's overseas core copper-cobalt production capacity was released, compounded by the upward elasticity of procyclical copper prices, making it a world-class mining enterprise for the development of copper, cobalt and various metal resources.
The impact of TFM mineral equity was cleared up, and production capacity advantages were released at an accelerated pace. According to the annual production of major products disclosed by the company, in 2023, the company achieved copper production of about 419,500 tons, a significant increase of 51%; cobalt metal production of about 55,500 tons, a sharp increase of 174% year on year; gold production of about 18,800 ounces, an increase of 16% year on year; and production of all other kinds of metals increased slightly. The construction and commissioning of the company's TFM and KFM projects for the Congolese gold core mine is progressing rapidly. Within 2023, the first phase of the KFM copper-cobalt project has been completed, successfully put into operation, and the design production capacity has been achieved; the three TFM hybrid production lines have all been successfully resolved, which means that the company's two world-class giant mines in the Congolese gold layout have entered a production capacity release period. In the future, along with the TFM mine production line and the further release of KFM mining capacity, the company's copper-cobalt metal production can be expected to increase further thick.
Dispose of Australia's NPM copper and gold mine; optimize and adjust the company's capital allocation efficiency. The company announced in December 2023 that the company transferred 100% of its shares in CMOC Mining Pty Lt and 100% of the shares of CMOMetals Holding Limited held by its wholly-owned subsidiary Molybdenum Holdings at a price of US$756 million and $1, respectively. Among them, CMOC Mining owns 80% of the NPM copper and gold mine and is responsible for operating the NPM copper and gold mine. This asset sale will help reduce the Group's balance ratio and improve the efficiency of capital allocation, focusing on the Group's development priorities.
Relatively low global inventories compounded the “double deceleration” of mine-side supply and smelting capacity growth; procyclical copper price performance is expected to further consolidate the company's profitability. Looking at supply and demand, the definitive slowdown in supply-side growth has brought about a further strengthening of copper fundamentals. The mismatch between copper ore output and the growth rate of electrolytic copper production may accelerate the emergence of a shortage of copper ore. The contradiction of insufficient raw materials on the mine side may force the growth rate of electrolytic copper output to decline in 2024; on the demand side, in the future, driven by consumption scenarios such as power infrastructure, photovoltaics, and new energy charging stations in China, copper metal consumption may remain high, further strengthening the copper supply and demand conflict. The inventory side continues to remain low, compounded by expectations of interest rate cuts from the Federal Reserve. The shift in monetary policy can be expected to be implemented. It is expected that the company will fully benefit from the upward flexibility of copper prices and the high business concentration in the copper and cobalt sector, further consolidating profitability.
Investment advice: TFM hybrid mine and KFM copper-cobalt mine production capacity continues to increase, compounded by the tightening copper supply in anticipation of the Federal Reserve's interest rate cut, leading to an upward shift in copper prices, and the company's profitability has increased dramatically. The estimated 24-26 revenue is 1975.0/2072.9/216.94 billion yuan, and net profit attributable to mother is 100.1/110.0/12.19 billion yuan. The corresponding PE level is 16.9/15.4/13.9 times, maintaining the “buy” rating.
Risk warning: risk of mine crawling falling short of expectations, risk of the Federal Reserve tightening beyond expectations, etc.