Key points of investment
The Q2 net profit center increased 54% year over year, and the performance exceeded expectations
In the first half of 2024, the company expects to achieve net profit of 7.46 to 0.796 billion yuan, a year-on-year increase of 48%-58%; of these, in 24Q2, the company expects to achieve net profit of 4.4 to 0.49 billion yuan, an increase of 46%-62% over the previous year. The performance exceeded expectations, mainly due to the impressive growth of the business in China and Mongolia and Africa.
China-Mongolia business: The company's share is expected to increase, and the expansion of the integrated commodity and trade business scale will contribute to incremental profits
Cargo volume at Ganqimaodu Port reached a new high in the first half of 2024. The company's business volume between China and Mongolia is expected to increase year-on-year, and the scale of the integrated goods and trade business is expected to expand further in the future. 1) In terms of coking coal, the amount of coal imported by 24Q1-Q2 and Ganqimaodu Port was 9.65 and 10.64 million tons respectively, +26% and +32% year-on-year respectively. The company's supply chain trade and warehousing business volume is expected to increase markedly year-on-year. Considering that the company signed a new ten-year coal long-term agreement with MMC at the beginning of the year, agreed to purchase at least 1.5 million tons/year of coal products from MMC in the first five years, and complete 20% equity settlement in the KEX mine in 24Q2, we expect a significant increase in the scale of the company's coking coal trade integration in the second quarter, further consolidating the company's core competitiveness in the China-Mongolia cross-border logistics market and increasing profit margins. 2) In terms of copper powder, 24H1 Ganqimaodu Port imported about 0.49 million tons of copper powder, +12% over the same period. The company operates the Jinhang Copper Powder Customs Bonded Depot at Ganqimaodu Port, which will fully benefit from the increase in total imports.
African business: The traffic volume of Kassa roads and ports exceeded expectations, and the cross-border logistics business in Africa began. The average daily traffic volume of Kassa roads and ports in the Democratic Republic of the Congo (DRC) in Africa is expected to increase further in the second quarter of 2024.
From April to April 2024, China imported about 0.35 million tons of copper concentrate from the Democratic Republic of the Congo (DRC), +35% over the same period. The average import volume increased by about 10% over the previous month. It is expected that the road and port traffic volume of the company's KASA project in the Democratic Republic of the Congo (DRC) will continue to increase. With the expansion of mine production, the export scale and logistics demand of the Democratic Republic of the Congo (DRC) copper are expected to expand further, and the traffic volume of Kassa roads and ports is expected to further increase. At the end of May 2024, Zijin Mining's Camoa Mine Phase III plant was completed and put into operation ahead of schedule. The comprehensive production capacity is expected to increase from 0.45 million tons/year to more than 0.6 million tons/year.
The company completed the acquisition of the Zambian BHL fleet in Q2, kicking off business development in the African cross-border logistics market.
In the first half of 2024, the company completed the acquisition of BHL Fleet, a well-known cross-border transportation company in Africa, and further deepened the African inland transportation business network layout, expanded fleet size, optimized transportation routes, established distribution logistics nodes in different countries in central and southern Africa, increased the cross-border vehicle load rate in various ways, and built a transportation network in central and southern Africa integrating highways, ports, logistics nodes and ports. The results of Africa's major logistics landscape are beginning to show, and brand influence is gradually expanding, forming the company's second growth curve, contributing new momentum.
Profit forecasting
Considering the rapid growth of the company's China-Mongolia business and African business, we raised the company's profit forecast. Net profit to mother is expected to be 1.45, 1.85, and 2.16 billion yuan respectively for 24-26, maintaining a “buy” rating.
Risk warning: Risk of changes in overseas political and economic environments. Freight volume falls short of expectations, freight rates fall short of expectations.