The company's net profit to mother increased 36% year over year in 2023. In 2023, the company achieved revenue of 186.3 billion yuan (+7.7%), net profit attributable to mother of 8.25 billion yuan (+36.0%), net profit after deducting non-return to mother of 6.23 billion yuan (+2.7%), and net operating cash flow of 15.54 billion yuan (+0.6%). Among them, quarterly revenue for the fourth quarter of 2023 was $54.6 billion (+34.7%), net profit attributable to mother was 5.81 billion yuan (+663%), and net profit not attributable to mother was 4.88 billion yuan (+258%).
2023Q4's performance improved significantly month-on-month, mainly due to the sale of 80% shares in the Australian NPM copper and gold mine, and the net income from Q4 investment was 2,254 billion yuan. Also, with the resolution of the Congolese Gold equity issue in the first half of the year, terminal sales increased in the fourth quarter.
Construction of key projects completed. During the reporting period, the company completed the construction of two world-class copper-cobalt mines, TFM hybrid mine and KFM, with KFM progressing ahead of schedule. In 2024, TFM made every effort to push ahead with the completion of production in the first quarter and met the standards in the second quarter. KFM maintained stable production. TFM and KFM completed LME copper trademark registration, and achieved annual copper production of more than 520,000 tons and more than 60,000 tons of cobalt.
Copper production is reaching the million-ton level. 2024 is the year of the company's internationalization 2.0. The development goal for the next 5 years is to achieve an annual production of 80,000,000 tons of copper metal, 90,000-100,000 tons of cobalt metal, 25,000-30,000 tons of molybdenum metal, and more than 10,000 tons of niobium. In other words, TFM and KFM have the potential to increase to 80-1 million tons of copper production capacity. In 2024, the company will step up geological exploration work, launch a storage expansion plan, prepare for the development of TFM Phase III and KFM Phase II, and launch TFM Phase III and KFM Phase II expansion projects in due course.
Risk warning: Mine production expansion is falling short of expectations, and there is a risk that copper and cobalt prices will drop sharply.
Investment advice: Maintain a “buy” rating.
With the completion and commissioning of the TFM mixed mine project and the first phase of the KFM project, the company began production release year in 2023. It is one of the few large copper mining companies in the world to maintain high copper growth. In 2024, the company's copper production will double compared to 2022, and cobalt production will increase 200%. It is expected to become the world's top 10 copper producers and the world's largest cobalt producer. Assuming that the spot settlement price of LME copper in 2024-2026 is 8800 US dollars/ton, the cobalt metal price will remain at 230,000 yuan/ton. The estimated net profit for 2024-2026 is 100.77/113.32/11.556 billion yuan, a year-on-year growth rate of 22.2/12.4/ 2.0%; diluted EPS is 0.47/0.52/0.53, respectively, and current stock price corresponding PE is 17.7/15.7/15.4X, respectively. The company has the world's top copper-cobalt mines. The construction and commissioning of two world-class projects has doubled the company's copper production within two years, has high performance flexibility for copper prices, and maintains a “buy” rating.