The main business grew steadily. The 23-year results were affected by impairment, and the 24Q1 performance improved significantly. The company's revenue in 2023 was 938 million yuan, up 25.28% year on year; its main product, mining rubber wear-resistant spare parts revenue was 542 million yuan, up 25.41% year on year, and the three-year CAGR reached 30.66%. In '23, the company prepared 13.92 million yuan for asset impairment for Shanghai Bowan Lanyun Real Estate, making the performance slightly lower than expected. In the first quarter of '24, the company achieved net profit of 39 million yuan to mother, reversing losses over the previous year.
High copper prices drive capital expenses of mining enterprises, and the company's “EPC+ equipment+spare parts” fully benefited.
LME copper prices are at historically high levels, inventory levels are at historically low levels, and copper prices are expected to maintain a strong trend. The supply of copper ore is greatly disrupted. Demand is still supported by green power equipment and new energy vehicles. The future may still show a situation where supply is less than demand. High copper prices stimulate capital expenditure growth in the global mining industry, and demand for the company's products/services is expected to increase.
The company's rubber spare parts products have excellent performance, and the space at home and abroad is vast. Rubber wear-resistant spare parts are superior to traditional manganese steel products in terms of efficiency, electricity consumption, and steel ball consumption, and are favored by leading mining companies. The company's current key downstream customers include well-known domestic and foreign mining companies such as Jiangxi Copper, CITIC Heavy Industries, and Meiyi Electric Steel. Gongzhuying's rubber spare parts products are sustainable and will benefit from the overseas process of Chinese mining companies.
Profit forecast and investment advice: The company's net profit for 24-26 is estimated to be 1.7/2.4/30 billion yuan. Considering that the company is one of the few leading companies with a high downstream boom, new products, and new market resonance, it is clearly scarce domestically, and order performance is exploding. According to comparable companies, a reasonable PE for 2024 is 30x, corresponding to a reasonable value of 33.2 yuan/share. Maintain a “buy” rating.
Risk warning: risk of copper ore prices falling; Green Power's energy transformation falls short of expectations; overseas mining investment process falls short of expectations; penetration rate of rubber spare parts falls short of expectations; risk of fluctuations in raw material prices, etc.