Incident: The company released its 2024 quarterly report. In the first quarter of 2024, it achieved operating income of 1,110 billion yuan, down 9.25% year on year, up 13.44% month on month; net profit to mother was 247 million yuan, up 53.21% year on year, up 70.43% month on month.
Comment:
24Q1 performance grew steadily, and expense ratios improved month-on-month. 24Q1 achieved a deduction of 226 million yuan, a year-on-year increase of 49.46% and a month-on-month increase of 54.85%, mainly due to the year-on-year increase in the company's iron ore settlement price. The company's cost ratio improved month-on-month. The 24Q1 management cost rate was 8.95%, the environmental reduction was 2.43 pcts; the R&D cost rate was 0.35%, the loop reduction was 0.60 pcts; the financial cost ratio was 1.73%, and the loop was reduced by 2.26 pcts. The company is financially healthy, and the debt scale remains relatively low at a reasonable level. The 24Q1 balance ratio was 39.01%, and the average balance ratio for the past three years was 38.89%.
The “iron ore+oil and gas” business contributed to the basic market, and the project progressed in an orderly manner. 24Q1's refined ore sales increased 9.46% year on year to 689,600 tons; oil and gas sales increased 51.56% year on year to 1.4873 million barrels equivalent. The average 24Q1 Platts 62% iron ore price index was 123.56 US dollars/ton, down 1.55% year on year; the average spot price of Brent crude oil was 83.39 US dollars/barrel, up 2.52% year on year. The company's project progressed in an orderly manner. The mining project in the middle section of the iron ore mine completed 2,088 meters of excavation, completed an annual plan of about 17%, and completed a total of 16,583 meters of excavation, and the overall progress of the project was about 57%. The technology-modified magnetized roasting project has basically completed construction and equipment installation, and individual feed testing is being organized. The project will also complete the opening of the entire production line and joint testing with the original equipment. The company is expected to be officially put into operation within the year; the oil and gas business will promote approval of investment decisions by all parties in the western area of the Weizhou 10-3 Oilfield, and the Huizhou 12-7 Oilfield will continue to carry out geological reservoir research and evaluation work.
The lithium hydroxide project is expected to be put into operation in July. The fire section of the company's 20,000 ton lithium hydroxide (phase 1) project has been completed about 95%; the main production equipment rotary kilns, acidification kilns, acidification cooling kilns, ball mills, etc. have been installed; the wet section has completed about 90% of the structural components, and the main production equipment has been installed about 20%. The main structures of the ancillary facility complex, central control laboratory building, and general substation have been sealed. The company expects the project to be completed and put into operation in July '24. For the Bougouni lithium project in Africa, the company has completed the overall design of the Bougouni lithium mine site survey and beneficiation system; the mining project contractor has determined and completed contract negotiations; the general plan has been updated, and the site facility layout and explosives depot site selection have been determined.
Profit forecast: We expect the company's net profit to be 817 million yuan, 1,066 million yuan, and 1.01 billion yuan respectively in 2024-2026, corresponding to PE 18 times, 14 times, and 12 times, respectively.
Risk factors: The company's project progress falls short of expectations, the risk of commodity price fluctuations, etc.