The company announced 24Q3 results: revenue of 79.98 billion yuan, +7.11% YoY, +5.74% month-on-month; net profit to mother 9.273 billion yuan, +58.17% YoY, +5.09%. 24Q1-3's cumulative revenue was 230.396 billion yuan, +2.39% YoY; net profit to mother was 24.357 billion yuan, +50.68% YoY. Specifically, 24Q3's copper and gold production increased month-on-month, and we judge that it is still expected to achieve the annual production target; gold prices will increase and copper prices will decline; the pricing coefficient will rise sequentially; and costs are stable month-on-month. We believe that the target of a year-on-year flat rate will be achieved throughout the year. Judging from this, the company's ability to deliver on performance is strong, and it is actively expanding, maintaining a “buy” rating.

Expected to meet annual cost targets

In terms of price, 24Q3 Wind copper and gold prices were 0.075 million/ton and 569 yuan/gram, respectively, -5.7% and +3.0% month-on-month; we estimate that the 24Q3 pricing coefficient as a whole increased month-on-month. In terms of cost, the cost of 24Q3 mineral copper and gold rose and fell unevenly from month to month. Among them, the reduction item was gold ingot/copper concentrate/electrolytic copper, and the additional item was gold concentrate/copper concentrate/electrolytic copper. Overall, the company is expected to achieve the year-on-year flat target throughout the year. Taken together, the profitability of 24Q3 gross margin performance declined slightly (mining companies' gross margin -1.20 pct month-on-month; comprehensive gross margin -1.43 pct month-on-month), but the fair value for a single quarter was close to 1.6 billion yuan (-0.64 billion yuan in 24Q2).

It is expected to achieve the annual production target

The 24Q3 company achieved 0.27 million tons of copper and gold production, +5.7% and 1.4% month-on-month; 24Q1-3 achieved a cumulative production of 0.79 million tons and 54.3 tons of copper and gold. We believe that it is still expected to achieve the annual production targets: 1.11 million tons of mineral copper and 73.5 tons of gold. In addition, due to delays in project license processing and continued low lithium prices, etc., the company plans to delay the commissioning of the 3Q and Laguocuo project until 2025. It will further optimize the process and reduce costs before production is put into operation.

Actively seek merger and acquisition opportunities, and move resources to the next city

According to the company's “Notice on the Acquisition of the Akyem Gold Mine Project in Ghana” (24-10-9), the company plans to acquire 100% of the interest in the Akyem gold mine project in Ghana, which produces 11.9/13.1/9.2 tons in 21-23 annuity; if the acquisition is successful, it is significant for the company to achieve the 2028 annuity production target (100-110 tons).

Give an A/H target price of 19.67 yuan/19.01 HKD

Considering that copper and gold prices have risen above expectations since the beginning of '24, we raised the 24-year copper and gold price assumption; and considering that the market's inflation expectations for the US have strengthened, and the company has many overseas mines, we raised the 25-26 cost assumption. The final estimate was that the company's net profit for 24-26 was 34.248 billion yuan, 37.676 billion yuan, and 41.968 billion yuan (previous value: 31.22 billion yuan, 38.346 billion yuan, and 48.733 billion yuan). The year-on-year growth rates were respectively +62%, +10%, and the corresponding EPS is 1.29, 1.42, 1.58 yuan.

Comparable to the company's 25-year average PE valuation of 11.5X, considering the company's steady and active expansion as a leading domestic copper mining enterprise, the company's A share's 25-year 13.9X PE valuation is given. The average premium rate for A/H shares in the past three years is 12.53%, and the estimated target price for A/H is 19.67 yuan/HK$19.01.

Risk warning: commodity prices fluctuate, and the company's production release falls short of expectations.