Incident: The company released its 2024 quarterly report. In 24Q1, the company achieved revenue of 74.777 billion yuan, -0.22%, and +9.33% month-on-month; realized net profit of 6.261 billion yuan, +15.05% year-on-month, and +26.37% month-on-month; realized net profit of 6.224 billion yuan without deduction to mother, +15.93% year-on-year and -2.89% month-on-month.

The volume and price of the main mineral products rose sharply and cost control results were remarkable, driving the profit increase: 1) Volume: 24Q1 The company's mineral copper production was +3.8% month-on-month to 262,600 tons, mineral gold production -4.7% to 16.81 tons month-on-month, and mineral zinc production -0.2% month-on-month to 98,500 tons. 2) Price: The unit price of 24Q1's copper concentrate/electrodeposited copper/electrolytic copper was +4.3%/+5.2%/+3.6% month-on-month to 5.12/5.82/60,500 yuan/ton, respectively, the unit price of gold ingot/gold concentrate +7%/+11.3% month-on-month to 472.74/436.66 yuan/gram, and the unit price of mineral zinc -0.8% month-on-month to 12,200 yuan/ton. 3) This: 24Q1's copper concentrate/ electrodeposited copper/ electrolytic copper unit sales costs were -13.3%/+22.4%/-19.5% month-on-month to 1.85/3.22/371,000 yuan/ton, respectively; gold ingot/gold concentrate unit sales costs were -5.9%/-14% month-on-month to 276.72/145.17 yuan/gram, respectively. The unit sales cost of mineral zinc was -12.2% to 0.87 million yuan/ton. The company continued to advance the general policy of “improving quality, controlling costs, and increasing efficiency”, and the upward trend in the cost of major mining products was effectively contained Operating costs, represented by overseas projects, declined markedly from month to month. The volume and price of the main mineral products rose sharply and the results of controlling capital were remarkable, significantly increasing the company's gross profit. The gross profit margin of the 24Q1 company's mining enterprise was 54.5%, +8.88pct compared to the previous month.

Key copper and gold projects are progressing in an orderly manner, and the layout of new energy sources opens up room for future growth: 1) Copper: Camoa Copper Mine: According to the latest announcement in April 2014, the Phase III plant will be put into operation ahead of schedule in May 24, and production capacity will increase to more than 600,000 tons/year; Serbia's Peggy copper and gold mine and Bor copper mine: the renovation and expansion project will be fully completed by the end of 25, and the copper mine production capacity is expected to reach 300,000 tons/year; Tibet Dragon: The second phase of the renovation and expansion project has been approved by the relevant departments. Copper production capacity will reach 30-350,000 tons/year. 2) Gold: Rosebel Project: Technical transformation will form a gold production capacity of 10 tons/year after delivery; offshore gold mines:

The 12,000 tons/day mining project is progressing in an orderly manner. It is planned to be put into operation in 25 years, reaching an annual mineral gold production of about 15-20 tons after delivery; the Savayalton Gold Mine: Designed to be harvested first, then ground mining is expected to produce an average annual output of about 3.3 tons after delivery, and the average annual output of land mining is about 2.4 tons after delivery. 3) Lithium: 3Q Salt Lake: The first phase of the 20,000 tons/year lithium carbonate project has been basically completed, and the construction of the second phase of the 30,000 tons/year battery lithium carbonate project is progressing in an orderly manner; Lagocuo Salt Lake: Phase I formed a lithium hydroxide production capacity of 20,000 tons/year, and after the first and second phases were completed and put into production, it formed a lithium hydroxide production capacity of 4-5 million tons/year. With the support of the reserve project, the company plans to continue to raise copper/gold production to 1.1 million tons/73.5 tons in 2024. The compound output growth rate will reach 10%/15% in the next two years, and plans to form 120,000 to 150,000 tons of lithium carbonate equivalent production capacity by 2025.

Investment advice: The company's key mining projects are rich in reserves. Copper and gold mine production is expected to maintain steady growth in the future, and growth certainty is high. The upward cycle trend of gold and copper is gradually becoming clear, and the company's cost control effect can fully release profits from metal price increases. As production is released due to the commissioning of the project, the company's profit is expected to expand. We expect the company's 2024-2026 net profit to be 265/332/375 million yuan, corresponding EPS of 1.01/1.26/1.43 yuan, and PE of 18/14/12x, maintaining the “recommended” rating.

Risk warning: 1) the risk of a sharp drop in the price of metals such as gold and copper; 2) the risk that the company's new construction project will fall short of expectations; 3) the risk that the company's new production capacity will not release as much as expected; 4) the risk of overseas geopolitical changes.