Incidents:
The company released its report for the first quarter of 2024. In 2024 Q1, it achieved operating income of 74.777 billion yuan, down 0.22% year on year and 9.33% month on month; realized net profit of 6.261 billion yuan, up 15.05% year on year and 26.37% month on month; realized net profit without return to mother of 6.224 billion yuan, up 15.92% year on year and 2.89% month on month.
2024 Q1 The company's mineral gold and copper production increased year-on-year
In 2024 Q1, the company's mineral gold production was 16.8 tons, up 5.35% year on year, down 4.71% month on month; mineral copper production was 262,600 tons, up 5.19% year on year, up 3.80% month on month; mineral zinc production was 98,500 tons, down 8.53% year on year, down 0.17% month on month. Increased production expansion of the company's core copper mines such as the Kamoa Copper Mine in the Democratic Republic of the Congo (DRC), the Tibet Julong Copper Mine, and the Serbian Pegi Copper and Gold Mine will provide strong support for the annual production target. In terms of gold, the 2024 Q1 Rosbell gold mine will produce 2 tons of gold, and the annual gold production will be 10 tons after technical modification; Buritika gold will produce 2.2 tons of gold, and the planned mineral gold will be 8.6 tons for the whole year.
The results of cost reduction and efficiency were outstanding, providing endogenous support for performance growth 2024 Q1. The company further implemented the general policy of “improving quality, controlling costs, and increasing efficiency”. The upward trend in the cost of major mineral products was effectively contained, and the company's overall operating costs, especially the operating costs of overseas projects, declined markedly from month to month. In 2024 Q1, the gross margin of the company's mining enterprise was 54.50%, up 0.97 pct year on year, up 8.88 pct; the company's mineral gold concentrate unit sales cost was 145.17 yuan/gram, down 5.58% year on year, down 13.99% month on month; mineral copper concentrate unit sales cost was 185 thousand yuan/ton, down 7.93% year on year and 13.35% month on month.
In the upward cycle of gold and copper prices, I am optimistic that the volume and price of the company's core mineral products will rise sharply in 2024 Q1. The unit sales price of mineral gold concentrate was 436.66 yuan/gram, up 19.13% year on year and 11.27% month on month; the unit sales price of mineral copper concentrate was 512,000 yuan/ton, down 0.89% year on year and 4.26% month on month. The company plans to produce 1.11 million tons of mineral copper and 73.5 tons of mineral gold in 2024, an increase of 100,000 tons and 5.5 tons respectively over 2023; combined with 2024 gold and copper prices, ushered in an upward cycle, and the volume and price of the company's mineral copper and gold can be expected to rise sharply.
Profit Forecasts, Valuations, and Ratings
The company is a global mining giant. Top resources and production capacity allocation will help the company's production to climb rapidly, and mineral gold and copper production is expected to reach a high level and advance further. We expect the company's 2024-2026 net profit to be 263.57/323.69/36.483 billion yuan, respectively, and EPS of 1.00/1.23/1.39 yuan respectively; referring to comparable company valuations, the company will be given 20 times PE in 2024, with a target price of 20.25 yuan, maintaining a “buy” rating.
Risk warning: risk of large fluctuations in metal prices; geopolitical and policy risks; risk of exchange rate fluctuations; risk of safety and environmental protection; project construction progress falling short of expectations.