Core views
1. In the first quarter of 2024, the company achieved operating income of 74.78 billion yuan, down 0.2% year on year; realized net profit of 6.26 billion yuan, up 15.1% year on year, and 26.4% month on month.
2. The volume and price of copper and gold minerals have risen sharply. 2024Q1, the company achieved 263,000 tons of mineral copper production (+5% year over month, +4% month on month), mineral gold production of 16.8 tons (+5% year on month, -5% month on month), mineral copper/gold sales price increase by 1%/18%, and 4%/9%.
3. The cost of mineral copper and gold decreased significantly from month to month. The company has further implemented the general policy of “improving quality, controlling costs, and increasing efficiency”. The rising cost of major mineral products has been effectively contained, and the gross profit level has increased significantly.
occurrences
Company releases report for the first quarter of 2024
In the first quarter of 2024, the company achieved operating income of 74.78 billion yuan, down 0.2% year on year; realized net profit of 6.26 billion yuan, up 15.1% year on year and 26.4% month on month.
Brief review
1. Volume: 2024Q1 Company's mineral copper/gold production increased 5%/5%, and the volume of 2024Q1 production: 263,000 tons of copper (+5% year over year, +4% month on month), mineral gold production was 16.8 tons (+5% year over month). Increased production and expansion of the company's core copper mines, the Democratic Republic of the Congo (Gold) Camoa Copper Mine, the Tibet Julong Copper Mine, and the Serbian Peggy Copper and Gold Mine, etc., and the core gold mine projects such as Pogra Gold Mine, Sabayalton Gold Mine, Norton Gold Field, and Shanxi Gold have been put into operation and resumed production one after another, which will provide strong support for the annual production target.
2. Price: 2024Q1's mineral copper/gold sales price increased 1%/18%, and the price of 2024Q1: mineral copper increased by 4%/9%; price: mineral copper 53,200 yuan/ton (+1.3% year over month, +3.8% month on month), mineral gold 456 yuan/gram (+18.2% year over year, +8.9% month on month).
3. Cost: 2024Q1's copper/gold costs increased by 4%/11%, and the loop decreased by 12%/7%
2024Q1 cost: 22,400 yuan/ton of mineral copper (+3.6% year over year, -12.4% month on month), 223 yuan/gram of mineral gold (+11.5% year on year, -7.2% month on month).
In the first quarter of 2024, 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 curbed. The company's overall operating costs, especially the operating costs of overseas projects, declined markedly from month to month. The company focused on overseas project cost control and set up an international business committee to form an “integrated” full-process cost autonomous and controllable system for overseas construction, logistics, procurement, manpower and engineering technology. Combined with the background of the continuous rise in gold and copper prices, the company's gross profit level increased significantly.
Investment suggestions: Under the benchmark assumptions of 75,000 yuan/ton, 78,000 yuan/ton, and 79,000 yuan/ton in 2024-2026, and gold prices of 531 yuan/gram, 542 yuan/gram, and 552 yuan/g, respectively, the company's net profit from 2024 to 2026 is expected to be 27.1 billion yuan, 33.5 billion yuan and 37.8 billion yuan respectively. The PE corresponding to the current stock price is 16.88, 13.69 and 12.13 times, respectively. Considering the company's position in the copper and gold industries and its low cost advantages, the company is “bought” ” Ratings.
Risk analysis
(1) The commissioning progress of the mining project fell short of expectations.
(2) The global economy has declined sharply, copper consumption has shrunk in a cliff-style manner, and copper prices have dropped sharply. In its newly released Global Economic Outlook, the World Bank expects global GDP growth of 3.1% in 2024 and 3.2% in 2025. The agency believes that as inflation slows and growth stabilizes, the global economy is on the path to a soft landing, but risks remain. European and American economic data are already showing a downward trend. If it falls into a deep recession, the impact on non-ferrous metal consumption will be huge. According to our estimates, if the price of copper falls by 5%/10%, the company's net profit to mother will drop by 2.5%/5% in 2024.
(3) US inflation got out of control, the Federal Reserve's monetary tightening exceeded expectations, and a strong dollar suppressed the price of gold. The US is unable to effectively control inflation and continues to raise interest rates.
The Federal Reserve has raised interest rates drastically continuously, but services, especially rents and wages, seem to be sticking to the decline in inflation. If the Federal Reserve maintains a high level of interest rate hikes, it will be bad for gold and copper prices.
(4) Mineral development policies have been tightened. If policies related to mineral development are tightened, it may affect the company's production of metal products.