The capital expenditure of overseas mining companies has entered a high boom range, and capital expenditure lags behind metal prices: Currently, metal prices such as copper prices and gold prices are ahead, and with the subsequent Federal Reserve interest rate cut cycle, and the 2024 exploration budget for the four major mines is still growing. It is expected that the capital expenditure of global mining companies will continue to rise.

The increase in the volume of overseas contracted projects by Chinese enterprises is compounded by the acceleration of the expansion of China's overseas equity mines. The growth trend of belt conveyor exports is obvious: in 2023, the export scale of belt conveyors was 1.1 billion US dollars, and the compound growth rate in 2017-2023 was 15%.

Belt conveyors, the core product of carriers, are the best choice for 100 kilometer bulk transportation: Compared with traditional bulk transportation methods such as automobile transportation and railway transportation, belt conveyors have large capacity, high transportation efficiency, easy operation, and continuous transportation, and have the advantages of being economical, safe and environmentally friendly.

The domestic market share of Yunji has been rising steadily, and it is expected to seize overseas share: Relying on the company's R&D advantages and experience in many large-scale projects to build a moat, the domestic market share of Yunji Group will increase from 2.3% to 3.7% in 2020-2023. At the same time, the cost performance ratio of the company's products is significantly higher than overseas competitors such as ThyssenKrupp, and the core technical indicators such as bandwidth, length, and traffic volume have also reached the same level as overseas competition, so it is expected that the company will continue to seize overseas market share.

Conveyor belts have a lot of room for overseas growth: According to statistical estimates, in 2024, the overseas belt conveyor market size is about 26.1 billion yuan, with an additional demand of 13.5 billion yuan and equipment renewal requirements of 12.6 billion yuan. The company has acquired VLI in Australia and is actively expanding overseas markets.

There are plenty of orders on hand, and profit release is highly certain: 2.4 billion yuan of on-hand orders at the end of the 2024Q1 period is 2.3 times the annual revenue of 2023. The equity incentive targets are expected to be 0.15 billion yuan, 0.23 billion yuan, and 350 million yuan respectively, with a compound growth rate of 50%.

Profit forecast: Domestic business is rising steadily as the basic market, and overseas performance is expanding during a period of profit explosion. At the same time, the company switched from cyclical stocks to export chain growth stocks, which is conducive to an increase in overall valuation. Referring to the company's current order situation, net profit due to mother is estimated to be 1.86, 2.76, and 384 million yuan in 2024-2026, EPS is 1.16, 1.73, and 2.40 yuan, respectively. The PE corresponding to the current stock price is 24, 16, and 12 times, respectively. First coverage, giving a “buy” rating.

Risk warning

1. The global mine capital expenditure plan falls short of the expected risk;

2. Overseas business development falls short of the expected risk;

3. Risk of exchange rate changes;

4. Geopolitical risks of overseas projects;

5. Risk of changes in raw material prices;

6. The promotion of intelligent fund-raising projects falls short of the expected risk;

7. The progress of equity incentives falls short of the expected risk.