24H1 returned net profit of 0.542 billion yuan to mother, maintaining an “increase in holdings” rating

The company 24H1 achieved revenue of 30.641 billion yuan (yoy -17.69%) and net profit of 0.542 billion yuan (yoy +0.3%) to mother. In view of the pressure on smelting and processing costs since 24, we lowered our 24-25 copper smelting profit. The company's net profit for 24-26 is 1.038/1.362/1.557 billion yuan (previous value:

13.78/14.63/-). Comparable company Wind agreed to expect an average PE (24E) value of 15.0X, giving the company 15.0XPE for 24 years, corresponding to a target price of 4.18 yuan (previous value of 6.47 yuan), maintaining an increase in holdings rating.

24H1 Production of main products achieved in half of the time and over half of the task

24 H1's main products have basically achieved half of the annual production target. Mining companies produced 0.1,395 million tons of concentrated lead and zinc, up 4.03% year on year (among them, mining companies in China produced 0.0817 million tons of lead-zinc ore, and foreign mining companies produced 0.0578 million tons of lead-zinc ore). The company's smelting enterprise produced 0.424 million tons of copper-lead-zinc series products, an increase of 4.10% over the same period last year (including 0.2165 million tons of lead-zinc products and 0.2075 million tons of cathode copper); it produced 0.8311 million tons of industrial sulfuric acid, 0.0168 million tons of sulfur, and 63 tons of silver. The company's deep processing enterprise produces 0.0076 million tons of aluminum profiles; 0.0086 million tons of zinc powder for mercury-free batteries, 580 tons of nickel-plated steel strips, 34 tons of perforated copper strips, 571 tons of composite materials, and 632 tons of hot bimetals.

The 24H1 mining sector benefited from rising prices, and the smelting sector was pressured. The gross margin of 24H1's mining sector increased 2.65pct year on year to 22.08%, mainly due to the 11%, 1%, 8%, 20%, and 28% year-on-year increases in lead, zinc, copper, gold and silver prices, respectively. The gross margin of the company's copper smelting sector fell 0.69 pct to 3.3%, mainly due to insufficient copper ore supply compared to smelting demand since 24, and smelting and processing costs were under pressure. As of August 23, '24, the TC spot price was still only 6.7 US dollars/ton (Wind).

The gross margin of the company's lead-zinc smelting sector fell by 3.18 pct to 18.53%, mainly due to strong conflicts in zinc mining and metallurgy since '24, and smelting costs are under pressure. As of August 27, '24, the TC spot price was still only 1,490 yuan/ton (Baichuan Yingfu).

Risk warning: Downstream demand falls short of expectations, new projects fall short of expectations, etc.