Tin prices rose year-on-year in the first three quarters of 2024, and the company's performance improved markedly in the first three quarters of 2024. We judge that this was mainly due to the deep processing sector's net profit of 1.283 billion yuan, +17.2% year-on-year, mainly due to a 15.9% year-on-year increase in tin prices; looking at 2024Q3, the company achieved operating income of 10.438 billion yuan, -3.6% year-on-year, and +0.6% month-on-month, achieving net profit to mother 0.484 billion yuan, +18.6% year-on-month, and +2.1% month-on-month. In addition, the company's operating costs and management expenses increased significantly in the third quarter, with operating costs +2.3% month-on-month and management expenses +39.0% month-on-month. Considering the increase in costs and expenses, we lowered our performance forecast. We expect the company to achieve net profit of 1.847, 2.33, and 2.541 billion yuan from 2024 to 2026 (previously estimated to be 2.062, 2.364, and 2.614 billion yuan, respectively), with year-on-year changes, respectively +31.2%, +26.1%, EPS was 1.12, 1.42, and 1.54 yuan/share, respectively, corresponding to the closing price of October 28, 2024 PE was 13.9, 11.0, and 10.1 times, respectively, maintaining the “buy” rating.

The company made efforts to overcome the impact of maintenance. The company exceeded the production target in the first three quarters of 2024, producing 0.0642 million tons of tin in the first three quarters of 2024, achieving 75.5% of the 2024 production target, producing 0.105 million tons of copper, +5.3% year over year, achieving 80.8% of the 2024 production target, producing 0.1064 million tons of zinc, +28.8% year over year, achieving 80.9% of the 2024 production target, producing 95 tons of indium, year over year +43.9%, achieving 122.1% of 2024 production target. Overall, the company made efforts to overcome the impact of routine shutdown and maintenance of tin smelting equipment in the third quarter, and exceeded the annual production target.

The company's expense ratio increased significantly during the 2024Q3 period, but the balance and liability structure continued to optimize the 2024Q3 sales expense ratio of 0.2%, +0.07pct month-on-month, and the management expense ratio increased markedly month-on-month, mainly due to the suspension of production and maintenance of tin smelting equipment in the third quarter. 2024Q3's R&D expense ratio was 1.06%, and +0.16pct month-on-month, mainly due to the company's increased prospecting efforts. In the third quarter of 2024, the company's short-term loans and long-term loans were drastically reduced. At the same time, considering that the company issued 2 billion yuan of renewable corporate bonds in 2024Q2, the company's balance and liability structure continued to be optimized. As of September 30, 2024, the company's balance ratio was 41.79%, down 3.31 pct from June 30, 2024.

Risk warning: Myanmar's progress in resuming production exceeded expectations, semiconductor demand recovery fell short of expectations, tin prices fluctuated sharply, etc.