Huaxi Nonferrous released its 2023 annual report and 2024 quarterly report: the company's revenue in 2023 was 2,924 million yuan, +5.66% year over year; net profit to mother was 314 million yuan, +43.39% year over year; net profit to mother after deducting non-recurring profit and loss was 321 million yuan, +5802.55% year over year.
The company's revenue for the first quarter of 2024 was 964 million yuan, +61.61% year on month; net profit to mother was 125 million yuan, +81.06% year on year, +53.04% month on month; net profit to mother after deducting non-recurring profit and loss was 125 million yuan, +52.63% year over month, and +54.68% month on month.
Key points of investment
The company's tin metal production increased dramatically in 2023, and the amount of tin price recovery in the first quarter of 2024: In 2023, tin metal production increased significantly year-on-year. In terms of tin products, the output of tin concentrate was 6500.19 tons, +22.91%, and the yield of tin ingots was 7195.86 tons, or +55.16%; in terms of zinc products, the yield of zinc concentrate was 35900.09 tons, +32.69%, and the zinc ingot output was 26570.19 tons, or +49.04%; in terms of lead-antimony products, it achieved 14123.23 tons of lead-antimony concentrate, +22.69% year-on-year.
Price: Tin prices and antimony prices both increased year on year and month on month in the first quarter of 2024.
1) In terms of tin prices, China's Yangtze River Nonferrous Market in 2023 was 1 #锡均价为21 .23 million yuan/ton, the average price of tin in 2024 was 2171,000 yuan/ton, +3.92% YoY, +3.67%; 2) In terms of antimony prices, according to Baichuan Yingfu, the average price of antimony ingots in 2023 was 80,300 yuan/ton, +3.34% YoY.
Gross profit: The gross margin of the tin ingot and lead-antimony concentrate business increased year-on-year in 2023.
In 2023, the gross profit margin of the company's tin ingot business was 39.57%, +1.80pct year on year, the gross profit margin of the zinc ingot business was 17.42%, the year-on-year -14.02pct, and the gross profit margin of the lead-antimony concentrate business was 70.74%. +3.48 pct compared to the previous year.
The company has rich resource reserves, and product output can be expected to increase
The mine in production is rich in resource reserves, and the mine has great potential to increase reserves in the long term during exploration. The company is producing two mines: Tongkeng Mine and Gaofeng Mine. 1) Tongkeng mine: The grade of tin in primary tin ore is 0.43%, corresponding to a tin metal reserve of 30920.26 tons, which can produce 5329 tons/year; the zinc grade is 2.49%, corresponding to a zinc metal reserve of 132699.13 tons, which can produce 22958 tons/year of zinc metal; the lead grade is 0.63%, which can produce 2298 tons/year of lead metal; the antimony grade is 0.26%, which can produce 2837 tons/year of antimony metal. The grade of tin in the sand tin ore is 0.33%, and the corresponding tin metal reserve is 10152 tons. 2) Gaofeng mine: tin grade is 1.62%, corresponding to tin metal reserves of 138361.47 tons, can produce 4451.31 tons/year; lead grade is 1.85%, corresponding to lead metal reserves of 157,757.24 tons, can produce lead metal 7673.06 tons/year; zinc grade is 6.26%, corresponding zinc reserves are 526022.20 tons, can produce zinc metal 26936.41 tons/year; antimony grade 1.64%, corresponding antimony metal reserve is 142295.87 tons, can produce antimony Metal 6586.70 tons/year; silver grade 74.43g/t, corresponding silver metal reserves of 639.88 tons, can produce 8.5 tons/year of silver metal.
In addition, among exploration mines, the company has prospecting rights for the Dachang Ore Copper Mine, the Yangjiaojian Zinc-Copper Mine in the Dachang Ore Field, the Zinc-Lead Mine in the Wengluo-Guandong District of the Dachang Ore, the Longkou Lead-Zinc Mine and the Lengshuitang Zinc Mine, which have great potential for long-term storage growth.
In 2024, the company will focus on promoting the tin-zinc mineral resource development project in the Tongkeng mining area, the Gaofeng 105 ore body production expansion project, the Tongkeng mine green intelligent mine construction project (phase I), and the Gaofeng mine green intelligent mine construction project (phase 1), etc., and the company's product output is expected to increase further.
Myanmar's tin mine shutdown continues, increasing expectations of supply shortages
Myanmar's tin ore supply disruptions continue, and tin prices may be strong in the short term. According to SMM, the Wa State Administration of Industry and Mining recently issued two notices on mining issues, which emphasize the need for all mining sites in the Manxiang region to strictly abide by the Wa Central Economic Planning Commission's regulations on stopping work and production. If the regulations are violated, they will be held legally responsible. Therefore, at present, there are still disturbances in tin ore supply expectations.
Profit forecasting
The company's revenue for 2024-2026 is estimated to be 37.42, 38.75, and 4,010 billion yuan, respectively, and net profit to mother is 5.82, 6.27, and 673 million yuan, respectively. The PE corresponding to the current stock price is 18.8, 17.4, and 16.2 times, respectively.
Considering that tin prices are expected to continue to operate at a high level, the company's tin production is expected to increase. For the first time, we covered the company and gave it a “buy” investment rating.
Risk warning
1) The company's production capacity release fell short of expectations; 2) the risk of falling metal prices; 3) downstream demand fell short of expectations, etc.