Core views
CITIC Metals Trading+ Resources invests in two-wheel drive, leverages its advantages in the field of trade, invests in world-class mineral resources, and has significant advantages in resource acquisition, channel construction, and customer service. In the field of metals trade, the company's ferrous metals trade volume has stabilized in the leading position in the industry. The copper metal business trade volume has exceeded 50 billion yuan, while the niobium business share ranks first in the country. In the field of resource investment, the company has invested in Las Bambas copper mine, Ivanhoe Mining, CBMM, etc., and holds a number of world-class copper, zinc, niobium, and platinum group metal mineral interests. The amount of copper ore resource rights is as high as 5.4 million tons, and the equity copper output is 84,000 tons, which not only stabilizes the supply of resource channels, but also strongly enhances the industry position in the mining sector, which is of great strategic importance in ensuring the supply of scarce resources in the country's strategic strategy. The company adheres to the “trade+resources (investment)” two-wheel drive to help ensure the safe and stable supply of the national metal and mineral industry chain and supply chain.
occurrences
Net profit not attributable to mother increased by 34.88% year-on-year in 2023
The company recently released its annual report. In 2023, the company achieved operating income of 124.999 billion yuan, a year-on-year increase of 4.89%; net profit attributable to shareholders of listed companies was 2,057 billion yuan, a year-on-year decrease of 7.13%; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 1,966 billion yuan, an increase of 34.88% year on year.
Brief review
The scale of the trade business is growing steadily. In the field of trade, the company has been deeply involved in the trade business for many years, and has strong market competitiveness in both ferrous metals and non-ferrous metals. In 2023, the trade business achieved revenue of 124.999 billion yuan, including 51.112 billion yuan for the ferrous metals business and 73.650 billion yuan for the non-ferrous metals business. Judging from the distribution of each quarter of the year, the distribution of revenue and profit is uneven. Affected by factors such as the Spring Festival holiday, the revenue for the first quarter is generally relatively low. Adhering to the “virtual mine+supply chain integration” business strategy, the iron ore business volume stabilized over 50 million tons in 2023, continuing to maintain the leading position in the industry; the annual revenue scale of the copper business exceeded 50 billion yuan; as the exclusive distributor of CBMM, the world's largest supplier of niobium products in China, the company accounts for about 80% of the domestic niobium product market, ranking first in the country.
It participated in CBMM, the world's largest producer of niobium, and contributed approximately 210 million yuan in equity profits in 2023. The company holds 33.33% of China's niobium industry, and China's niobium industry holds 15% of the shares in CBMM (Brazilian Mining and Metallurgy Company), the world's largest supplier of niobium products. The biggest demand for niobium is in the steel industry, accounting for about 87%. The distribution and production of global niobium resources is highly concentrated in Brazil. Global niobium reserves are expected to exceed 17 million metal tons, of which Brazil is about 16 million metal tons; in 2022, global niobium resource production is about 79,000 metal tons, of which Brazil produces about 71,000 metal tons. CBMM, in which the company is a shareholder, is the world's largest producer of niobium products. The reserves of niobium resources controlled by the mine account for more than 70% of the world's proven niobium reserves, and its niobium production accounts for about 80% of the world's total production, and is in a leading position in the market.
It holds 15% of the shares in the world-class copper mine Las Bambas and contributed approximately 318 million yuan in equity profits in 2023. The company holds 15% of MMG SAM's shares, penetrates 15% of Las Bambas, obtains equity resources of about 1.15 million tons of copper, contributed about 45,000 tons of copper production and equity profits of about 320 million yuan in 2023. Las Bambas is a world-class copper mine. As of 2023, it has 1.3 billion tons of copper ore, about 7.69 million tons of copper, and a large amount of molybdenum, gold, and silver metals. In 2023, Las Bambas sold 374,700 tons of copper, 9.49,000 ounces of gold, 5.3613 million ounces of silver, and 4037 tons of molybdenum, with revenue of $3.417 billion, an increase of 64%, and an EBITDA of $1,397 million, an increase of 24%. Las Bambas plans to produce 28—32 million tons of copper in 2024, and C1 costs $1.6-1.8/lb. With the advancement of Chalcobamba, the second mining area of Las Bambas, Las Bambas copper production is expected to reach 350,000-400,000 tons/year in the future.
It holds 24.81% of Ivanhoe Mining's shares and contributed 582 million yuan in equity profits in 2023. The company is the single largest shareholder of Ivanhoe Mining, contributing about 4.24 million tons of equity copper resources, about 39,000 tons of equity copper production in 2023, and equity profit of about 582 million yuan. The core assets of Ivanhoe Mining are the Kamoa-Kakula copper mine (holding 39.6%), the Kipushi zinc-copper mine (holding 62%), and the Platreef platinum group polymetallic mine in South Africa (holding 64%). Among them, the Kamoa-Kakula copper mine has 39.60% shares, identified 43.12 million tons of copper resources, with an average grade of 2.54%. It is the largest copper mine in Africa. The Kamoa-Kakula copper mine will produce 393,600 tons in 2023, and the production plan is 507,000 tons of copper in 2024. After completing the third phase of construction in 2024, copper production will increase to more than 600,000 tons, and the estimated cash cost is 1.22 US dollars/lb. Among them, the Kipushi mine is the highest grade zinc mine in the world. Production is expected to resume in the third quarter of 2024, with an estimated annual output of 250,000 tons of zinc. The Platreef platinum group polymetallic project in South Africa is under construction. It is expected to be put into operation in the third quarter of 2024. The project will be built in stages. After full commissioning, it will become one of the world's largest and lowest-cost producers of palladium, platinum, rhodium, nickel, copper and gold.
Investment advice: The company has been deeply involved in the trade business for many years. Trade+ Resources invests in two-wheel drives, and invests in many world-class mineral resources, including niobium, copper, zinc, platinum, etc., and has invested in mines to be put into operation or expanded one after another, and mine resources have contributed significantly to performance growth. The company's net profit for 2024-2026 is estimated to be 28.64/32.10/3.495 billion yuan, respectively, corresponding to PE of 15/14/13 times, covered for the first time, and given a purchase rating.
Risk warning: 1. The company involves commodity trade. Commodity prices fluctuate greatly, and price fluctuations have a great impact on the company's performance; 2. The company is involved in cross-border trade, procurement and sales in currencies other than the base currency, and faces a high risk of exchange rate fluctuations. The company accounts for 23.6% of business revenue outside of China. If the RMB appreciates/depreciates by 10%, the company's total RMB revenue declines/increases by about 2.4%, while generating large exchange gains and losses; 3. The company invests in overseas mineral resources, and mining production and operation contribute to the company's net profit and overseas production unit fluctuates. It may affect the company's performance; 4. The company's mineral investments are all overseas, and overseas political uncertainty and global supply chain instability may affect the company's performance; 5. When related metal prices fluctuate drastically, it is not ruled out that the company's trade profit and investment income will be greatly affected at the same time. If the metal price rises/falls by 10%, the company's corresponding revenue will increase/decrease by 10%.