The company released its 2023 annual report and 2024 quarterly report
In 2023, the company achieved operating income of 5.867 billion yuan, +16.10% year over year; realized net profit of 912 million yuan, +36.95% year over year; realized net profit without deduction of 928 million yuan, +38.19% year over year.
In the first quarter of 2024, the company achieved revenue of 1,611 billion yuan, +41.36% year over month; net profit to mother of 240 million yuan, +27.94% year on year and -2.28% month on month; net profit after deducting non-return to mother was 243 million yuan, up 29.25% year on year and -4.93% month on month.
Magnetite and copper are the main sources of revenue
In 2023, magnetite achieved revenue of 4.203 billion yuan, accounting for 71.64% of total revenue, or +17.79% year-on-year. Copper achieved revenue of 1.120 billion yuan, accounting for 19.08% of total revenue, +15.16% year-on-year. Vermiculite achieved revenue of 415 million yuan, accounting for 7.08% of total revenue, or +4.79% year-on-year.
Optimizing the product structure, magnetite gross profit bucked the trend
Volume: Magnetite production in 2023 was 5.8218 million tons, -32.28% year on year; sales volume was 6.7945 million tons, -10.89% year over year. In 2024, the company plans to produce 7.5 million tons of magnetite and sell 10 million tons.
Profit: In 2023, magnetite gross profit margin was 82.35%, -4.01pct year-on-year. In 2023, the average annual price of 62% iron ore at Platts was 119.75 US dollars/ton, a year-on-year decrease of 0.4 US dollars/ton, the lowest price in nearly three years. The company has a small price difference between high and low grade iron ore. By further optimizing the product structure and increasing sales of low-grade ore, the company's performance grew steadily when the average annual mineral price declined.
In 2024, the company will 1) promote the expansion of magnetite shipments: improve the efficiency of car and train handling inside and outside the factory through communication with the South African Railway Company, increase locomotives, wagons, etc., and closely track changes in mineral prices, carry out cost estimates, and start automobile transportation. 2) Promote the magnetite extraction project: further improve the quality of iron powder, increase sales premiums, and ease the tight transportation situation in South Africa.
Copper Phase II project continues to advance to provide resource guarantees
Volume: In 2023, copper product output was 24,400 tons, +3.44% year over year; sales volume was 23,700 tons, +6.02% year over year. In 2024, the company plans to produce 30,000 tons of copper and sell 30,000 tons.
Profit: Copper gross profit margin -5.68%, -7.76pct year-on-year. In 2023, the average annual price of LME copper was 8,477.77 US dollars/ton, a year-on-year decrease of 319.2 US dollars/ton.
2023 Copper Phase II 5 #破碎机已投入使用，并基本完成调试，进入部分投产状态。 In 2024, the company will promote equipment installation and commissioning, personnel training, and orderly connection between phase I and phase II, and continuously increase the volume of copper mining in Phase II on the premise of ensuring safe underground production and construction. The second phase of construction is expected to be completed in December '24. After the second phase of the copper project is put into operation, the production and operation period of copper ore can continue for 15 years.
Vermiculite ore production remains stable
? Volume: In 2023, the company produced 169,200 tons of vermiculite, -1.60% year on year; sales volume was 1312,000 tons, -13.95% year over year. In 2024, the company plans to produce 168,000 tons of vermiculite and sell 170,000 tons. PC vermiculite ore is one of the top three vermiculite ores in the world, and vermiculite production accounts for about 1/3 of the global share. Due to the high grade and quality of PC vermiculite ore, the company has established a strong supply relationship with downstream customers and has been exporting vermiculite to European and Asian customers for a long time.
Investment advice:
We expect the company to achieve operating income of 59.30, 63.79, and 7.743 billion yuan respectively in 2024-2026, and net profit of 11.26, 12.58 billion yuan, and 1,551 billion yuan, corresponding EPS of 1.73, 1.93, and 2.38 yuan/share, respectively. Currently, the corresponding PE price is 10.8, 9.7, and 7.9 times. The company maintains a “buy-A” rating, with a target price of 25.95 yuan/share for 6 months, which is about 15 times PE in 24 years.
Risk warning: New product promotion falls short of expectations, demand falls short of expectations, and project progress falls short of expectations.