The 24Q1 company achieved net profit of 630 million yuan, maintained a “plus” rating company, achieved revenue of 2.87 billion yuan (yoy +3.5%, qoq +7.0%), and net profit to mother of 6.3 billion yuan (yoy -24.0%, qoq -16.9%). We maintain our profit forecast. We expect the company's net profit to be 31.19/31.35/3.155 billion yuan for 24-26, respectively. Comparatively, the company Wind agreed to expect PE16.6X in 24, giving the company 16.6XPE in 24, corresponding to a target price of 16.09 yuan (previous value of 15.29 yuan), maintaining an increase in holdings rating.
The year-on-year decline in performance was mainly due to falling molybdenum prices
The company's profitability and profit are linked to molybdenum prices: According to Wind, the average price of pure molybdenum in 24Q1 was 467,500 yuan/ton, a year-on-year decrease of 26.5%. As a result, the company's profitability declined year-on-year, achieving a gross profit margin of 43.3% and a year-on-year decrease of 14.15 pcts. However, the cost rate for the period decreased by 1.84 pct to 5.64% year on year, with R&D expenses falling 1.46 pct to 1.85%. The net profit returned to mother was 630 million yuan, a decrease of 24% over the previous year.
A leading supplier in the global molybdenum industry chain, holding two high-quality mining companies, is the world's leading supplier of the entire molybdenum industry chain. It is mainly engaged in the production, marketing and research of molybdenum series products and the trade and operation of molybdenum related products. It produces three series of products: molybdenum furnace materials, molybdenum chemicals, and deep processing of molybdenum metals. It is widely used in steel smelting, petrochemicals, machinery manufacturing, aerospace, electronic lighting, biomedicine and other fields. The two molybdenum ores controlled by the company have excellent quality. Among them, the Jinduicheng molybdenum ore has rich reserves, high grade and low impurities. The product quality is suitable for deep processing, with an annual output of 13.5017 million tons and a service life of 34 years; Ruyang Donggou has an annual output of 9.581 million tons and a service life of 56 years.
The molybdenum industry is expected to show a pattern of strong supply and demand in '24
According to Asia Metal Network, on the supply side, molybdenum concentrate production in '23 was 220,000 tons, down 0.27% year on year; however, due to strong demand and the rise in molybdenum prices in the previous period, China's molybdenum concentrate production is expected to increase to 242,000 tons in '24. In addition, China's total imports of molybdenum concentrate in '23 were 40,000 tons, an increase of 17.15% over the previous year. On the demand side, due to increased consumption in steel mills, iron molybdenum production is expected to increase to 175,000 tons in 24; as most consumers are still actively inquiring, molybdenum powder production is expected to increase to 24,000 tons; due to the recovery in end user demand, the output of molybdenum chemical manufacturers is expected to increase slightly year-on-year in '24.
Risk warning: Downstream demand fell short of expectations, and molybdenum production growth exceeded expectations.