Net profit from revenue to parent reached a record high, and the sale of NPM focused on core assets. In 2023, the company achieved operating income of 186.269 billion yuan, +7.68% year on year; net profit to mother of 8.250 billion yuan, +35.98% year on year; net profit without deduction of 6.233 billion yuan, +2.73% year over year. Among them, Q4 achieved operating income of 54.587 billion yuan, +34.72% year over year; net profit to mother of 5.807 billion yuan, +547.79% year over year; net profit after deduction of 4.887 billion yuan, +257.81% year on year, +329.59% month on month. The sale of 80% interest in the NPM copper-gold mine in 2023 was a lucrative return.
Two world-class copper-cobalt mines were put into operation, and copper-cobalt production grew rapidly. In 2023, the company produced 419,500 tons of copper and 55,500 tons of cobalt, with year-on-year increases of 51% and 174%, respectively. Copper production is close to the top ten in the world, making it the world's largest producer of cobalt, and remains the world's leading producer of molybdenum, tungsten, and niobium. 2024 is the first year that both TFM and KFM will enter full production. TFM will reach production in the first quarter and meet the standards in the second quarter. KFM must achieve stable production and high production, ensure that copper production is completed by more than 520,000 tons throughout the year, an increase of more than 100,000 tons over 2023, and produce more than 60,000 tons of cobalt.
The prospects for increasing the reserves of gold-copper-cobalt deposits in the Congo are broad, and future production is expected to reach a new level. As of 2023, the company's two major copper-cobalt deposits in the Congo Gold KFM+TFM total resources totaled 346.382 million tons of copper-containing metals and 5.246,400 tons of cobalt-containing metals, and exploration activities and mine production practices have proved that the mining area has great resource potential and favorable resource transfer conditions. The company will step up geological exploration work, launch plans to increase reserves, and prepare for the development of TFM Phase III and KFM Phase II. The company proposed development goals for the next five years to achieve annual production of 80-1 million 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 metal by 2028.
Supply growth is limited and demand continues to grow, and the focus of copper prices is expected to rise steadily. New global copper projects have been released centrally in the past two years, but production mines have been disrupted by multiple factors such as declining ore grade, production accidents, and community disturbances. Production continues to fall short of expectations, offsetting the increase in new projects to a certain extent. The high disturbance rate is expected to continue until 2024, and the number of new global copper projects will decrease from 2025. At the same time, demand for new energy sources has maintained high growth, traditional demand remains resilient, and the focus of copper prices is expected to rise steadily.
Investment advice: The company plans to increase copper production significantly in 2024. It is expected to rank among the top ten copper producers in the world, and will still have high growth in the next five years. Global copper supply growth is limited, and the focus of copper prices is expected to continue to move upward, and the company will benefit significantly. The company is expected to achieve operating income of 2003.09/1992.01/200286 billion yuan in 2024-2026, net profit to mother of 107.94/113.73/119.53 billion yuan, respectively, and corresponding EPS 0.50/0.53/0.55, respectively. Maintain the company's “buy” rating.
Risk warning: Prices of main products such as copper and cobalt fell sharply; production releases fell short of expectations.