Core views:
Affected by the low base, net profit to mother increased 638% in 24Q1, in line with expectations. According to the company's financial report, 24Q1 achieved operating income of 31.5 billion yuan, +5% year-on-year, -13% month-on-month, net profit of 451 million yuan, basic earnings per share of 0.23 yuan/share, -6% year-on-year, +638% month-on-month, net operating cash flow of 6.2 billion yuan, +509% year-on-year, -395% month-on-month, and a debt ratio of 64.05%, compared to 7.62 PCT at the end of 23. The main reason for the significant month-on-month improvement in 24Q1 performance was: 1. Management expenses were reduced by 222 million yuan. 2. Asset depreciation decreased by 690 million yuan.
In 24Q1, the prices of copper, gold, silver, and Yunnan sulfuric acid all rose month-on-month. According to Wind, iFind, 23Q4, the average prices of SHFE copper, SGE gold, and Huatong silver were 69,448 yuan/ton, 489 yuan/gram, and 5,998 yuan/kg, respectively, up 3%, 4%, and 2% month-on-month; the prices of Chifeng Yuncun, Yunnan sulfuric acid, and Fujian sulfuric acid were -1%, 9%, and -0.3% month-on-month respectively.
The relocation of the Southwest Copper Industry affected 24Q1 cathode copper production, and production is expected to gradually resume in 24Q2. According to the company's relocation announcement and investor exchange announcement, Southwest Copper, a subsidiary of Yunnan Copper, implemented the relocation. The old installation began to stop production in an orderly manner on December 30, 2023. It is planned that the electrolysis system will be completed and put into operation in May 2024, and the fire control system will be put into operation in August. The impact of the relocation of the Southwest Copper Industry on the total output of the company's main product, cathode copper, in 2024 is not expected to exceed 100,000 tons.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.18/1.26/1.27 yuan/share. Referring to comparable company valuations, the company will be given 15 times PE in 2024, with a corresponding reasonable value of 17.66 yuan/share, giving it a “buy” rating.
Risk warning. Production of major products fell short of expectations; copper prices fell sharply; copper processing fees fell sharply; gold and silver prices rose less than expected.