Incident: Tin Industry Co., Ltd. released its 2024 semi-annual report. The company achieved operating income of 18.775 billion yuan in the first half of the year, a year-on-year decrease of 17.77%; net profit attributable to shareholders of listed companies was 0.8 billion yuan, up 16.35% year on year; net profit after deducting non-recurring profit and loss was 0.998 billion yuan, an increase of 67.95% year on year.

Comment:

The company's tin production and sales have been ranked first in the world for many years. The company's main business is exploration, mining, beneficiation, smelting of tin, copper, zinc, indium and other metal ores. The main products are tin ingots, cathode copper, zinc ingots, die-cast zinc alloys, indium ingots, tin and tin chemical products. It has rich resources, the most complete industrial chain and complete categories in the tin industry, making it the largest tin production and processing base in China. According to estimates, in 2023, the company's tin metal domestic market share was 47.92%, up 0.14 percentage points from 2022, and the global market share was 22.92%, up 0.38 percentage points from 2022. The company ranked first in the world in tin production and sales.

Production of all of the company's major products has increased. Currently, the company has tin smelting capacity 0.08 million tons/year, cathode copper production capacity 0.125 million tons/year, zinc smelting capacity 0.1 million tons/year, die-cast zinc alloy 0.03 million tons/year, and indium smelting capacity 60 tons/year. New Materials, an important shareholder of the company, has a tin production capacity of 0.043 million tons/year and a tin chemical production capacity of 0.0271 million tons/year. In the first half of 2024, the company produced 0.1852 million tons of non-ferrous metals, including 0.0452 million tons of tin (up 6.6% year on year), 0.0703 million tons of copper (up 7.99% year on year), 0.0688 million tons of zinc (up 4.56% year on year), 65 tons of indium (up 42.42% year on year), 621 kg of gold, and 82 tons of silver.

Affected by positive macroeconomic sentiment and tight supply expectations, the prices of the company's main products are operating strongly. Expectations for the resumption of production in major tin-producing countries continued to be delayed in the first quarter, compounding the impact of changes in tin ingot export approval policies in some tin-producing regions. As the demand side gradually stabilized and improved, tin prices rose steadily slightly. Entering the second quarter, against the backdrop of rising expectations of interest rate cuts in major overseas economies, the stock replenishment cycle and re-inflation trading sentiment drove the prices of major non-ferrous metals to rise sharply. The indium market basically ran smoothly in the first quarter of 2024, and as crude indium raw materials continued to be tight in the second quarter, superimposed small metal trading sentiment continued to rise, and fine indium prices rose sharply. As prices rose, fine indium social inventories continued to become apparent. Market sentiment returned to rationality, and indium metal prices remained stable after a slight decline.

Profit forecast and investment rating: The company's revenue for 2024-2026 is estimated to be 42.686/43.988/45.203 billion yuan, respectively, and net profit to mother is 1.985/2.431/2.723 billion yuan, respectively.

Multiple factors led to a rise in the price of the company's main products, and the company's gross margin improved markedly, giving the company a “buy” rating.

Risk warning: the risk that the resumption of production in other tin-producing countries exceeds expectations; the risk of policy changes in overseas tin-producing countries; the risk that product demand falls short of expectations; the risk that product prices will fluctuate greatly; and the risk that performance forecasts and valuation judgments fall short of expectations.