Benefiting from high molybdenum prices throughout the year, the company's performance achieved another good result
In 2023, the company achieved operating income of 11.531 billion yuan, up 20.99% year on year, and achieved net profit of 3,099 billion yuan, up 132.19% year on year, the best level since listing; net cash flow from operating activities benefited from high molybdenum prices, increasing 39.97% year on year to 3.473 billion yuan. The company's sales/management/R&D/financial expenses accounted for 0.30%/4.10%/2.91%/-0.20%, respectively, -0.02pct/-0.63pct/0.80pct/0.13pct.
Based on the assumption of a short-term decline in molybdenum prices in 2024, we lowered 2024-2025 and added a profit forecast for 2026. We expect net profit to be 25.62/27.31/2,882 billion yuan respectively (the predicted values before 2024-2025 were 33.69/3.410 billion yuan, respectively), EPS was 0.79/0.85/0.89 yuan, and PE corresponding to the current stock price is 14.6/13.7/13.0 times, respectively. Considering the stable supply and demand structure of the molybdenum market, it will be correct Molybdenum prices form the support. The company's molybdenum production and resource reserves are at the top of the market. Molybdenum business profits are expected to benefit and maintain a “buy” rating.
The production of molybdenum products increased steadily, and the sharp rise in volume and price drove the main business growth. In 2023, the processing capacity of the company's main mines, Jinduicheng molybdenum ore and Donggou molybdenum ore reached 2.3827 million tons, an increase of 4.37% over the previous year. Among them, the annual output of the company's main products, ferromolybdenum, ammonium molybdate/molybdenum powder, was 1.56/0.65/ 0.52 million tons, up 2.75%/4.60%/5.66% year-on-year respectively. According to the company's annual report data, in 2023, the domestic price of 45% molybdenum concentrate rose 38.35% year on year, and the average price of international molybdenum oxide rose 28.61% year on year. Benefiting from the increase in production and molybdenum prices, the company's main business revenue from mining, smelting and deep processing of molybdenum ore products increased 21.33% year on year to 10.474 billion yuan, and gross margin increased 14.28 pct to 52.55% year on year.
Stable supply and demand are strong, and the high molybdenum price boom is expected to continue
From the supply side, global molybdenum production continued to decline in 2021-2022. Although there was a slight recovery in 2023, the impact on molybdenum supply will gradually become apparent due to the continued decline in overseas mine stocks, and future molybdenum supply growth is expected to be limited; from the demand side, demand for molybdenum is closely related to the boom in high-end manufacturing. In the context of manufacturing transformation, the increase in demand in fields such as special steel will benefit the molybdenum demand side. Therefore, we believe that a structure with stable supply and demand will support the molybdenum price center, and molybdenum prices are expected to rise steadily in the future.
Risk warning: rapid release of associated molybdenum ore with main varieties; rapid release of monomer molybdenum ore; demand from downstream steel companies declined, demand for special steels weakened; the company's mine production release fell short of expectations.