Report summary

Copper and gold production continues to grow. Copper: 2024H1 achieved 0.519 million tons of mineral copper, +5.3%; among them, Serbia's Zijin Mining/Serbia's Zijin Copper achieved 0.09/0.059 million tons of mineral copper, +33%/+45%, respectively, and overproduction; Kamoa Copper (equity) /Kolwezi copper mine achieved 0.084/0.045 million tons of copper, respectively. The decline in production is mainly due to unstable electricity supply in the Democratic Republic of the Congo (DRC). The decline in production is mainly due to unstable electricity supply in the Democratic Republic of the Congo (DRC) in the future. Measures such as stations and photovoltaic power plants achieve stable electricity supply. Gold: 2024H1 achieved 35.4 tons of mineral gold, +9.5% year over year; among them, Colombia's Buritica/Guyana Aurora/Australia's Norton Jintian/Longnan Zijin achieved 5.0, 1.9/3.8/3.0 tons of mineral gold, +25%/+43%/+28%/+19% year over year, respectively, contributing to the increase in major mineral gold.

Independent exploration has achieved remarkable results, and there are plenty of resources at hand. The company has significant advantages in independent exploration, and attaches great importance to the economic and technical re-evaluation of existing deposits. Major geological prospecting findings of 2024H1's Julong Copper Mine and Heilongjiang Copper Mine were reviewed and approved by the competent natural resources department. The two copper mines added a total of 18.377 million tons of copper resources and 5.777 million tons of copper reserves, accounting for about 14.2% of China's copper reserves at the end of 2022. By the end of the reporting period, the total amount of proven, controlled and estimated resources held by the company was 104.67 million tons of copper, 3,528 tons of gold, 12.12 million tons of zinc (lead), 28,380 tons of silver, and 14.11 million tons of lithium (LCE). The amount of equity resources increased by 6.197 million tons of copper, 53.71 tons of gold, and 3334 tons of silver compared to the beginning of the year.

The production cost control effect is remarkable. The sales costs of the company's products mainly include mining, mineral processing, smelting, mineral concentrate procurement, ore transportation costs, raw material consumption, power, salary and fixed asset depreciation. The cost control effect of 2024H1 company was remarkable. The production costs of gold ingot/gold concentrate/copper concentrate were -4.4%/-6.7%/-8.8%, respectively. This was mainly due to the obvious scale effect of the company's raw material procurement side and lean management.

Excellent performance on the cost side. The 2024H1 company's sales/management/finance expense ratio was 3.41%, -0.15pct; of these, the Q2 sales/management/finance expense ratio was 3.11%, -0.33pct year-on-year, and -0.59pct month-on-month. The company's cost side has declined, mainly due to factors such as falling labor costs, which reflect the continuous results of the company's lean management.

The leverage ratio declined, and the operation showed high-quality development. The company's balance ratio at the end of 2024H1 was 56.7%, -2.3 pct year on year, 1.6 pct month on month, and continued to decline since 2023Q4; long-term and short-term loans at the end of 2024H1 were 69.1/23.2 billion yuan, -2/-5.5 billion yuan year on year, and -1/-8.8 billion yuan month on month; 2024Q2 company's net operating cash flow was 12.3 billion yuan, +50% month on month; the company's leverage ratio for the first half of the year It declined, and operations showed a high-quality development trend.

Investment advice: We thoroughly analyze the company's 2024 mid-year report. The company's copper and gold production has achieved continuous growth, the advantages of independent exploration are remarkable, the amount of resources on hand is abundant. At the same time, production costs and cost side control are good, and the financial leverage ratio has declined. The company's high-quality growth is conducive to long-term development. We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to be 31.4/36/41 billion yuan in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: downstream demand falls short of expectations; supply exceeds expectations; release exceeds expectations; Fed tightening exceeds expectations.