1-3Q24 results beat market expectations
In 1-3Q24, revenue rose 2.39% YoY to Rmb230.40bn. Attributable net profit rose 50.68% YoY to Rmb24.36bn. Recurring attributable net profit rose 56.16% YoY to Rmb23.75bn, with basic EPS at Rmb0.92.
In 3Q24, revenue rose 6% QoQ to Rmb79.98bn, attributable net profit grew 5% QoQ to Rmb9.27bn and recurring net profit attributable to shareholders fell 10% QoQ to Rmb8.31bn, beating market expectations.
Attributable net profit hit a new high in 3Q24, mainly due to rising sales volume, prices of some products, and higher-than-expected non-recurring income.
Trends to watch Gross profit fell Rmb201mn QoQ in 3Q24, to Rmb16.19bn due to: 1. Gross profit of mine-produced copper fell Rmb1.2bn QoQ amid rising sales volume, falling prices and slight increases in cost. In
3Q24, the ASP of mine-produced copper fell 10% QoQ to Rmb57,805/t, and output rose 6% QoQ to 270,899t, mainly driven by the Kamoa and Yulong copper mines. Production cost was up 2% QoQ to Rmb22,885/t.
2. Gross profit of mine-produced gold grew about Rmb331mn QoQ thanks to rising sales volume and prices; cost edged up. In
3Q24, ASP of mine-produced gold rose 5% QoQ to Rmb537/g, and output rose 1% QoQ to 18.9t, with production cost rising 1% QoQ to Rmb233/g.
3. Gross profit of mine-produced zinc rose Rmb211mn QoQ on rising sales volume and prices of mineral zinc, falling costs. In
3Q24, ASP of mine-produced zinc rose 1% QoQ to Rmb15,154/t, output rose 8% QoQ to 109,652t and production cost fell 14% QoQ to Rmb7,938/t.
4. Gross profit of mine-produced silver remained flat QoQ amid rising sales volume and output and falling cost. In 3Q24, ASP of
mine-produced silver stayed flat QoQ at Rmb4.85/g, and output rose 12% QoQ to 121t. Production cost was Rmb1.81/g, down 2% QoQ.
In 1-3Q24, output of mine-produced silver exceeded production guidance, while output of mine-produced gold and copper slightly missed expectations. In 1-3Q24, 80%, 73% and 71% of the silver, gold and copper production plans were completed.
Lithium carbonate: Due to the delay in obtaining permits and licenses, the firm has postponed starting production at the Lakkor Tso Salar Project to 2025.
In terms of non-recurring income, gains and losses from changes in fair value of financial assets (excl. hedging) totaled Rmb1.03bn in 3Q24, giving a significant boost to its attributable net profit.
Long-term copper and gold output to rise; the firm plans to become one of the top 3-5 global mining companies at an accelerated pace.
In its new five-year plan, the firm has proposed plans and output guidance for 2028, including mine-produced copper output guidance of 1.5-1.6mnt; mine-produced gold output guidance of 100-110t; mine-produced zinc output guidance of 550,000-600,000t; as well as mine-produced silver output guidance of 600-700t; lithium carbonate output guidance of 250,000-300,000t; and mine-produced molybdenum output guidance of 25,000-35,000t, implying significant growth potential.
The firm is expanding its presence in high-quality assets globally, and it acquired the Akyem gold mine in Ghana in October. The firm is also accelerating the transformation of its resource advantages into production capacity and economic advantages, aiming to become one of the global top 3-5 mining companies
Financials and valuation
Given the long-term growth of copper, gold and lithium output and higher- than-expected non-recurring income in 3Q24, we raise our 2024 earnings forecast 3.1% to Rmb32.87bn and maintain our 2025 earnings forecasts of Rmb39.05bn.
We maintain OUTPERFORM ratings and target prices of Rmb23 and HK$21.4 for Zijin Mining A-shares and H-shares. Zijin A-shares are trading at 14.4x 2024e and 12.1x 2025e P/E, and our TP implies 19x 2024e and 16x 2025e P/E, offering 28.9% upside. Zijin Mining H-shares are trading at 12.7x 2024e and 10.4x 2025e P/E and our TP implies 16x 2024e and 13x 2025e P/E, offering 23.4% upside.
Risks
Higher-than-expected new supply of copper and zinc mines; disappointing interest rate cuts by the US Federal Reserve; disappointing capacity expansion.
