Core views:

The company disclosed its annual report for the year 23. In Q4, the company's gross profit increased, and the net profit due to asset impairment decreased 88%, which was in line with expectations. According to the company's financial report, in '23, the company achieved revenue of 147 billion yuan, +9% year-on-year, and net profit to mother of 1.58 billion yuan, or -13% year-on-year. 23Q4, revenue of 36.4 billion yuan, -1% YoY, -8% month-on-month, gross profit of 1.787 billion yuan, YoY +13%, net profit to mother of 61 million yuan, -81% YoY, -88% month-on-month, net operating cash flow -1,861 billion yuan, balance ratio 56.4%, compared to -3.4PCT at the end of 23Q3. Reasons for the month-on-month decline in the company's performance: 1. Q4 Assets depreciated by $724 million. 2. Management expenses increased by 179 million yuan month-on-month.

Copper prices fell slightly month-on-month in 23Q4, and the month-on-month rise in gold, silver, and sulfuric acid prices all contributed to profit growth. According to Wind, iFind, 23Q4, the average prices of SHFE copper, SGE gold, and Huatong silver were 67,684 yuan/ton, 471 yuan/gram, and 5,862 yuan/kg, respectively, up -1%, 2%, and 3% month-on-month; the prices of Chifeng Yuncun, Yunnan sulfuric acid, and Fujian sulfuric acid increased 61%, 15%, and 1%, respectively.

The company's copper concentrate production increased slightly year-on-year in '23. According to the company's financial report, in '23, the company produced 63,700 tons, 1.38 million tons, 5.16 million tons, 16.2 tons, and 737.5 tons of copper concentrate, cathode copper, sulfuric acid, gold, and silver, respectively, +2%, +8%, -5%, and 14% over the same period last year.

The company's copper mine costs continued to be optimized in '23. According to the company's financial report, the rise in copper prices in '23 increased the company's cathode copper and sulfuric acid production costs by 2% and 8% to 58,293 or 163 yuan/ton. Overall, the company's cost ratio, the total processing cost of copper in mine concentrates and cathode copper have been continuously optimized; indicators such as mine mining loss rate, ore depletion rate, copper beneficiation recovery rate, and total recovery rate of copper smelting have been further optimized.

Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.17/1.18/1.20 yuan/share. Referring to comparable company valuations, the company will be given 14 times PE in 2024, with a corresponding reasonable value of 16.39 yuan/share, giving it a “buy” rating.

Risk warning. Production of major products fell short of expectations; copper prices fell sharply; copper processing fees fell sharply; gold and silver prices rose less than expected.