Revenue continued to grow in 2023, and copper and cobalt production increased dramatically. In 2023, the company achieved operating income of 186.269 billion yuan, a year-on-year increase of 7.68%; achieved net profit of 8.250 billion yuan, an increase of 35.98% over the previous year; and realized net profit without deduction of 6.233 billion yuan, an increase of 2.73% over the previous year. In 2023, the company's mineral production increased dramatically: producing 419,500 tons of copper, up 51% year on year; producing 55,500 tons of cobalt, up 174%; producing 15,600 tons of molybdenum ore, up 3% year on year; producing 0.8 million tons of tungsten, up 6% year on year; producing 0.95 million tons of niobium, up 3% year on year; producing 18,800 ounces of gold, up 16% year on year. The company's copper production is close to the top ten in the world, making it the world's largest producer of cobalt.
Properly resolve the TFM equity issue and get out of the haze of the first half of the year. In 2023, due to issues such as TFM equity and the African logistics cycle, the company's production and sales were affected to a certain extent. Thanks to the company's efforts, it gradually emerged from the haze in the second half of the year. The company's two world-class mines, TFM and KFM in the Democratic Republic of the Congo (DRC), entered the production period; the construction of the TFM hybrid mine in the central and eastern regions was successfully completed, and 3 new production lines were added; KFM costs remained stable, high production and efficiency, contributing huge production capacity. With the full strength of all major mining areas, the company achieved a significant increase in total product production in 2023.
The disposal of Australia's NPM copper-gold mine yielded revenue, boosting performance growth. On December 5, 2023, due to the gradual decline in the production and net profit of the Australian copper and gold mine “NPM Copper and Gold Mine”, the company decided to transfer 100% of its shares in CMOC Mining and 100% of its shares in CMOC Metals held by its wholly-owned subsidiary CMOC Limited at a price of 755,999,999 US dollars and 1 dollar respectively to an unrelated third party Evolution. This asset transaction reduced the company's balance ratio and improved capital allocation efficiency, bringing in US$252 million Net profit.
Continuing to develop the potential of the TFM and KFM mines, the company's production can be expected to increase in the future. According to the company's announcement, the TFM mine will gradually reach production in 2024, and the potential of the KFM mine will be further exploited; in the same year, geological exploration work will be strengthened to prepare for the development of TFM Phase III and KFM Phase II; according to the company's production guidelines, copper and cobalt production is expected to increase further in 2024. Copper production will reach more than 520,000 tons, and cobalt production will also reach 60,000 tons.
Profit forecasting and investment ratings. We expect the company's net profit to be 101.14, 111.43, and 12.40 billion yuan respectively in 2024-2026, corresponding EPS of 0.47, 0.52, and 0.57 yuan, respectively (the original 2024-25 forecast was 0.51 and 0.58 yuan). Combined with comparable company valuations, and considering the increase in KFM/TFM project output, we gave the company a target price of 12.22 yuan for 26 times PE in 2024 (originally 22x in 2023), maintaining a “superior to market” rating.
Risk warning. Overseas geopolitical factors; risk of exchange rate and interest rate fluctuations, etc.