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 61.26 billion yuan, +7.2% year over year; net profit to mother of 2.98 billion yuan, +40.7% year over year; net profit after deducting non-return to mother was 2.99 billion yuan, +51.7% year over year. In 2024Q1, the company achieved operating income of 13.16 billion yuan, -1.37% year on year; net profit to mother was 780 million yuan, +31.6% year over year.
2023: The rise in gold and copper prices led to the release of performance. Volume: In 2023, the company's mineral gold production was 18.9 tons, -1.0 tons/ -5.2%, smelted gold 40.9 tons, +0.9 tons/ +2.2% year on year; 80,000 tons of mine copper, +0.07 million tons/ +0.8% year on year, and 41,100 tons of electrolytic copper, +18,000 tons/ +4.5% year on year; molybdenum concentrate output was 63 million tons, which was basically the same year on year. Price: In 2023, the average price of gold was 450 yuan/gram, +58 yuan/ +14.7%; the average price of cathode copper was 68,000 yuan/ton, +0.11,000/ +1.7% year on year; the average price of molybdenum concentrate was 3,855 yuan/ton, +1,048 yuan/tonne, +37.3% year on year. Profit: In '23, the company achieved gross profit of 8.13 billion yuan, +1.44 billion yuan/+36.4% year on year, of which the gold sector gross profit was 3.35 billion yuan, +570 million/ +20.7% year on year; gross profit of the copper sector was 3.38 billion yuan, +770 million/ +29.6% year on year.
2024Q1: A sharp rise in the volume and price of gold led to a year-on-year improvement in performance. Volume: 24Q1's mineral gold production was 4.5 tons, +0.37 tons/ +8.9% year on month, -0.51 tons/ -10.3% month on month; mine copper was 18,700 tons, -0.12 thousand tons/ -6.0% year on year, and -0.06 million tons/ -3.1% month on month. Price: The average price of gold in 24Q1 was 490.6 yuan/gram, +70.5 yuan/ +16.8% year on year, +18.4 yuan/ +3.9% month on month; the average price of copper was 69,400 yuan/ton, +0.09,000/ +1.3% year on month, and +0.18 thousand/ +2.6% month on month. Profit: 224Q1 achieved gross profit of 1.94 billion yuan, +290 million/ +17.6% year on year, and -460 million/ -19.2% month on month; achieved gross profit margin of 14.7%, +2.37 pct year on year, and -0.55 pct month on month.
2024: There is still potential for injection, and the Shaling Gold Mine is progressing steadily. In 2024, the company plans to produce 18.63 tons of mineral gold, 37.63 tons of smelted gold; 761,000 tons of mine copper, 392,300 tons of electrolytic copper; 67.56 tons of mine silver and 313.70 tons of electrolytic silver. In 2023, the company completed the acquisition of 100% of Laizhou CICC's shares. The project is under construction. The original plan was to be put into operation in 2025, contributing to the company's major future growth; Inner Mongolia's annual output is about 2 tons, and the 39% share acquisition has already been completed in 2023, and the company's shareholding ratio is expected to increase further.
Profit forecast and investment advice: We adjust the price of gold and copper. We expect the net profit to be 35.5/41.3/5.32 billion yuan in 24-26 (the value was 34.5/3.7 billion yuan before 24-25), and the corresponding EPS was 0.73/0.85/1.10 yuan, respectively. We will give a 2024 26X valuation, corresponding to the target price of 19.06 yuan/share, maintaining the “buy” rating.
Risk warning: the price of gold falls short of expectations, production safety risks