Key points of investment

The company released the 2024 three-quarter report, and the deductions did not meet expectations

24Q1-3: Achieved revenue of 230.4 billion yuan, +2% YoY; realized net profit of 24.4 billion yuan, +51% YoY; realized net profit of 23.7 billion yuan without deduction to mother, +56% YoY.

24Q3: Achieved revenue of 80 billion yuan, +7% YoY, +6% month-on-month; realized net profit of 9.3 billion yuan, +58% YoY, +5% month-on-month; net profit of 8.3 billion yuan after deducting non-return to mother, +50% YoY and -10% month-on-month.

The business performance in the third quarter was excellent. Changes in fair value contributed to the environmental increase in performance. From a management perspective, the company's core metal production increased month-on-month, and the company's ability to control costs was strong. The gross margin of 24Q3 mining enterprises reached 58.48%, -1.2pct month-on-month; the comprehensive gross margin reached 20.24%, -1.4pct month-on-month.

Among them, the core copper and gold business performance:

Copper: The gross profit margin of the mineral copper 24Q3 was 60%, -5pct month-on-month, mainly due to the month-on-month decline in metal prices. Price: The unit price of 24Q3 mineral copper is about 0.058 million/ton (-10% month-on-month); production: as of Q3, the cumulative production of 0.79 million tons of copper (completion rate 71%), Q3 production of 0.27 million tons of copper (+6% month-on-month); cost: the unit sales cost of 24Q3 mineral copper is about 0.023 million/ton (+2% month-on-month).

Gold: Mineral gold 24Q3 gross profit margin was 57%, +2pct month-on-month, mainly due to the month-on-month increase in gold prices and the company's continued cost control. Price: The unit price of 24Q3 mineral gold is about 537 yuan/gram (+5% month-on-month); production: as of Q3, cumulative production of 54 tons of gold (completion rate 74%), Q3 production 18.9 tons (+1% month-on-month); cost:

The unit sales cost of 24Q3 mineral gold was about 233 yuan/gram (+1% month-on-month).

In addition, the company's net income from 24Q3 fair value changes increased by about 2.2 billion yuan month-on-month, increasing the company's net profit to mother in the third quarter.

Endogenous and epitaxial progression, and the future increase of copper and gold is considerable

Endogenous: Projects such as the Saizi Copper and SaiZijin Project with a total annual copper production of 0.45 million tons, the first phase and phase II of the Julong Copper Mine Phase II renovation and expansion project with a total annual copper production of 0.3-0.35 million tons, and the first phase of the Aurora Land Mining Phase I in Guyana continue to advance.

Furthermore, in October 2024, the company's Tibet Junuo copper mining and selection project internal bill was reviewed and passed. The project is scheduled to be put into operation by the end of June 2026, achieving an average annual copper production of about 0.076 million tons after production.

Extension: In October 2024, the company announced the acquisition of the Akyem gold mine project in Ghana. The project has 89 tons of gold resources (including reserves) and 83 tons of land mining resource reserves. The 2023 project produced 9.2 tons of gold. According to research, the company believes that the project has great development prospects. It is expected that through further investigation, economic and technical re-evaluation, and technological transformation, there is room for further improvement in project resource reserves and output.

The company's medium- to long-term copper and gold production has increased significantly. In May 2024, the company announced the 2028 production plan for major products. It plans to produce 1.5-1.6 million tons of copper and 100-110 tons of gold in 2028.

Profit forecasting and valuation

From 2024 to 2026, we expect the company's revenue to be 327.4/354.7/374.7 billion yuan, respectively, +11.59%/+8.33%/+5.65% year-on-year, net profit to mother of 32.184/39.608/44.07 billion yuan, and +52.39%/+23.07%/+11.27% year-on-year, respectively. The corresponding company's PE is 14.74, 11.98, and 10.77 times, respectively, maintaining the “buy” rating.

Risk warning

Production and sales performance fell short of expectations, cost increases exceeded expectations, metal prices fell short of expectations, etc.