Key points of investment
Net profit to mother in the first half of 2024 was +51% year-on-year, and the performance exceeded expectations
At 24H1, the company achieved operating income of 4.64 billion yuan, +65% year-on-year, and realized net profit of 0.759 billion yuan to mother, +51% year-on-year. Among them, in 24Q2, the company achieved operating income of 2.65 billion yuan, +116% year-on-year, gross profit margin of 21.9%, net profit to mother of 0.45 billion yuan, +50% year-on-year, and net interest rate to mother of about 17%, mainly due to the expansion of business volume in China, Mongolia and China. The company plans to pay a dividend of 0.3 yuan per share in the medium term, corresponding to a dividend ratio of 38.5%.
According to the company's 2024 employee stock ownership plan (draft), the company-level performance assessment target is: if net profit to mother in 2024-2026 reaches 1.56, 2.11, and 2.63 billion yuan, respectively, +50%, +35%, and +25% year-on-year, respectively, then the unlocking ratio after expiration is 100%.
China-Mongolia business: Maintaining a high boom, the scale of the integrated goods and trade business is expected to expand. Relying on the scarce resource advantages of coal resources and core logistics assets, the company's business scale and port share are expected to expand further. 1) In terms of coking coal, 24H1 Ganqimaodu Port imported 20.29 million tons of coal, +29% over the same period last year.
24H1 obtained 20% of MMC's KEX mine shares and signed a new coal cooperation agreement with MMC to explore the “resource+trade+logistics” business model. It is expected that the scale of the company's coking coal trade integration will increase significantly.
2) In terms of copper powder, 24H1 Ganqimaodu Port imported about 0.49 million tons of copper powder, compared with +12%. The company operates the Jinhang Copper Powder Customs Bonded Depot at Ganqimaodu Port, which will fully benefit from the expansion of OT mine production and the increase in total imports at Ganqimaodu Port.
African business: The traffic volume of Kassa roads and ports continues to rise, and the cross-border logistics business in Africa has begun, and the average daily traffic volume of Kassa roads and ports in the Democratic Republic of the Congo (DRC) has further increased. The 24H1 African dry port business revenue is about 0.23 billion yuan. In 24Q2, China imported about 0.55 million tons of copper concentrate from the Democratic Republic of the Congo (DRC), an increase of about 14% over Q1 and an increase of about 51% over 23Q2. 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. As mining companies such as Zijin Mining and Luoyang Molybdenum expand production at copper-cobalt mines in the Democratic Republic of the Congo (DRC), the export scale and logistics demand of the Democratic Republic of the Congo (DRC) copper ore are expected to expand, and the traffic volume of the CASA project is expected to increase further.
The acquisition of a local fleet in Africa was completed, and the African cross-border logistics business began. 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 layout of Africa's inland transportation business network, 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.
Construction of the Sakania project on the Zambian side commenced in June 2024 to support further business growth in Africa. In June 2024, the company and China Aviation International signed an EPC general contracting agreement for the Sakania road and port project in Zambia. The project officially entered the construction period. The construction includes the Sakania port on the Zambian side, the road from Ndola to Mufulira, and the road leading to the Sakania border (about 60 km in total). After completion, the project will run through the Sakania port between the Democratic Republic of the Congo (DRC) and Zambia, and build a road connecting Ndola, the second-largest city in Zambia, to open up a transportation channel for mineral resources in the southeast direction of the Democratic Republic of the Congo (DRC) copper belt with Zambia.
Profit forecasting
Considering the rapid growth of the company's China-Mongolia business and African business, the net profit to mother is expected to be 1.56, 2.11, and 2.63 billion yuan respectively in 24-26, maintaining a “buy” rating.
Risk warning:
There is a risk of changes in overseas political and economic environments. Freight volumes fall short of expectations, and freight rates fall short of expectations.