Results reached a new high in 2023. In 2023, the company achieved a breakthrough in resource projects, and the mining service business developed with high quality. The company achieved annual revenue of 7.399 billion yuan, an increase of 38.18% over the previous year; net profit attributable to shareholders of listed companies was 1,031 billion yuan, an increase of 68.74% over the previous year, which is at the upper limit of the performance forecast. In the first quarter of 2024, the company achieved gross profit of 577 million yuan, including 406 million yuan for mining services and 169 million yuan for resource development; net profit attributable to shareholders of listed companies was 274 million yuan, an increase of 48.07% over the previous year.
The mining services business has outstanding competitive advantages. The company is deeply involved in the field of mining services. With its technical advantages, excellent execution and service performance, the company provides a large number of value-added services to mine owners, has been widely recognized by owners, and has accumulated an excellent reputation in the industry. In the process of development, the company is also continuously optimizing the project structure. It can be seen that in recent years, the share of overseas projects has continued to increase, and the revenue volume of individual projects has continued to rise. Cooperating with excellent customers on excellent projects is conducive to the company's high-quality development. In 2023, the company's mining services revenue was 6.607 billion yuan, up 25.52% year on year, and gross margin increased 1.37 percentage points to 28.95%.
Copper projects have been implemented one after another. In 2023, the Dikulushi copper mine will produce about 0.98 million tons of copper concentrate containing copper (equivalent) for the whole year; in 2024, it is planned to produce and sell about 10,000 tons of copper concentrate containing copper (equivalent). The Lonshi copper mine was put into operation one quarter ahead of schedule. It will produce 0.46 million tons of cathode copper in 2023 and 20,000 tons of copper metal in 2024. Production is expected to be achieved by the end of 2024. The San Matias copper-gold-silver project has successfully completed the Alacran copper-gold-silver deposit feasibility study and submitted an Environmental Impact Assessment (EIA) to Colombia's National Environmental Licensing Authority in December 2023. In January 2024, the company announced that it plans to buy 80% of KBI's shares in LCML for $1 and the claim formed from LCHL's $860 million loan to LCML for $1. If the transaction is successfully completed, the company will own 80% interest in the Lubambe copper mine. The company is currently actively promoting the delivery of the Lubambe copper project while ensuring stable production in the mine area.
The phosphate project has reached production. The Nancai District achieved the target of commissioning according to the plan, and achieved good results in meeting the standards as soon as it was completed. Excavation has now begun in the North Mining Area. The grade of this phosphate ore is excellent, and the average grade of P2O5 is as high as 32.65%. Against the backdrop of phosphate ore prices remaining strong, the commissioning of the project will bring new performance growth points to the company.
Risk warning: The company's resource development progress falls short of expectations; the decline in copper prices exceeds expectations; safety and environmental risks.
Investment advice: The company's mining service business has obvious advantages, high gross margin, and rapid growth. The mining resources business has deployed high-quality copper and phosphate resources, project development is progressing steadily, and there are prospects for increasing storage. Considering the commodity price boom and the project progress exceeding expectations, we slightly raised our original performance forecast. We expect the company's 2024-2026 revenue to be 102.2/127.6/14.62 billion yuan (original forecast 102.0/123.3/-), net profit attributable to the parent company of 17.7/24.0/2.78 billion yuan (original forecast 17.4/21.3/-), and the annual profit growth rate is 71.7%/35.6%/15.9%, respectively; diluted EPS is 2.94/3.99/4.62 yuan. The current stock price corresponds to PE 18.9/13.9/12.0x, maintaining a “buy” rating.