Key points of investment:

Incident: The company released its 2023 annual report and 2024 quarterly report. For the full year of 2023, the company achieved operating income of 137.45 billion yuan, +12.8% year-on-year; net profit to mother was 2.7 billion yuan, or -35.5% year-on-year.

In 2024Q1, the company achieved operating income of 32.72 billion yuan, -4.7% year-on-year, -6.1% month-on-month; net profit to mother was 1.1 billion yuan, +7.4% year-on-year and +791.9% month-on-month.

2024Q1: Copper and gold prices increased, but TC declined. After adjustment, Q1 performance was +75 billion yuan year-on-year.

Price: The average price of domestic spot copper in Q1 was 69,400 yuan/ton, +1.9%; the average price of copper spot TC was 25.4 US dollars/ton, -67.9% year on month; average price of sulfuric acid was 267.5 yuan/ton, +11.8% year on month, -6.9% month on month; average price of Shanghai Gold was 491.0 yuan/gram, +16.8% month on month. Benefits:

In 24Q1, gross profit of 2.72 billion yuan was the same; four fees fell by 0.2 billion yuan year on year; and asset impairment losses fell by 40 million yuan year on year.

2023: Mirador copper injection boosts gross profit. Volume: Production of mineral copper in 23 years was 175,000 tons, +239.3%; cathode copper 1.756 million tons, +7.8%; sulfuric acid 5.367 million tons, +8.3% year over year; and 20.8 tons of gold, +10.6% year on year. Price: In '23, the domestic spot copper price was 68,400 yuan/ton, +1.3%; the average price of spot TC was 84.5 US dollars/ton, +8.4% year on year; average price of sulfuric acid was 237.0 yuan/ton, -58.0% year on year; Shanghai Gold 451 yuan/gram, +14.7% year on year. Profit: Gross profit of 9.97 billion yuan was achieved in '23, an increase of 2.83 billion yuan over the previous year, mainly driven by Mirador copper injection. However, the four expenses were 3.45 billion yuan, compared with +1.28 billion yuan compared to the previous year, mainly due to a surge in R&D expenses in Mirado and 23Q4. According to the branch, Jinlong Copper and Jintong Copper achieved net profit of 8.5 billion yuan and 630 million yuan respectively, while China Railway Jiantongguan (Mirador Copper Mine) achieved net profit of 1.79 billion yuan, -1.7% over the same period last year.

The second phase of the Mirador Copper Mine is expected to be completed and put into operation in 25 years, driving a high increase in copper production. In 2024, the company plans to produce 161,700 tons of copper, 1.73 million tons of cathode copper, 428,000 tons of processed copper, 17.7 tons of gold, 524 tons of silver, 5.077 million tons of sulfuric acid, 339,000 tons of iron concentrate, and 351,000 tons of sulfur concentrate. The second phase of the China Railway Jiantongguan Mirador Copper Mine project is expected to be completed and put into operation in June 2025. At that time, the company expects to produce about 250,000 tons of copper metal per year, further enhancing the company's reserves of high-quality copper ore resources.

Profit forecast and investment suggestions: According to the latest situation, we raised the copper price to 7.5/7.8/80,000 yuan/ton. We expect the company's net profit to be 45.1/49.9/6.65 billion yuan in 24-26 (41.4/4.84 billion yuan before 24-25), and the corresponding EPS will be 0.36/0.39/0.53 yuan respectively, giving 24 times 14 times PE, with a corresponding target price of 4.99 yuan and maintaining a “buy” rating.

Risk warning: copper prices fall short of expectations, capacity release falls short of expectations