occurrences

On October 28, the company released its quarterly report for the year 24. In the first three quarters, it achieved revenue of 45.688 billion yuan, -13.49%; net profit to mother of 0.799 billion yuan, +11.66% year over year; net profit without return to mother of 0.773 billion yuan, +16.39% year over year. 3Q24 achieved net profit of 0.258 billion yuan, -14.89% month-on-month and +46.62% year-on-year.

reviews

Lead and zinc prices rose, and Q3 revenue increased 20% month-on-month. 3Q24 The average price of non-ferrous zinc in the Yangtze River was 0.0253 million/ton, +1.05% month-on-month; the average price of non-ferrous lead in the Yangtze River was 0.0165 million yuan/ton, +1.60% month-on-month; the average price of non-ferrous copper in the Yangtze River was 0.0751 million yuan/ton, -5.71% month-on-month. Q3 lead and zinc prices rose month-on-month, and 3Q24's revenue was 15.07 billion yuan, +19.53% month-on-month. Q3 mineral raw materials were tight, zinc concentrate zero order TC continued to decline, lead concentrate TC remained low, and copper concentrate zero order TC remained low at 5-6 US dollars/ton. The profit pressure on the smelting side was under pressure. The company provided partial guarantees for lead-zinc ore raw materials, which eased the pressure on smelting profit. The 3Q24 company's gross margin was 6.39%, +0.77pct year on month, and -0.69pct month-on-month, which was generally stable.

Competing for prospecting rights for lead-zinc-copper polymetallic ores, the upstream resource side reinvigorated. On August 30, 2024, the company announced that it was competing for prospecting rights for the Tiantang lead-zinc-copper polymetallic mine survey prospecting rights in Xinxing County, Guangdong Province. The amount of copper-lead-zinc metal resources within the mining area reached the scale of large-scale deposits, good ore selection performance, and good prospecting potential. The acquisition of prospecting rights further enhanced the company's mineral resource reserves and lead-zinc-copper resource side support capabilities.

The lead-zinc ore expansion and transformation project and the Dominican copper mine project are progressing, and the mine side can be expected to increase.

The company's lead-zinc mine and copper mine projects are progressing. On June 25, 2024, the company announced that it will use a total investment of 0.913 billion yuan to build the Fankou lead-zinc mine resource integration phase 0.3 million tons/year mining expansion project; with a total investment of 1.297 billion yuan, implement the Panlong lead/zinc mine 6,000 tons/day extraction expansion and transformation project optimization plan; at the same time, the company's Dominica Maimon mine project is underway. The subsequent increase in output is expected to add more resource-side value to the company.

Improving and strengthening the new material processing sector and extending and strengthening the recycling of tri-rare metals is expected to contribute new growth points. The company acquired Foshan Precision through its wholly-owned subsidiary Technology in 2023, and plans to work in the new material processing sector. By the end of the third quarter, the technology company's shares in Foshan Precision had increased to 96.565%. At the same time, the company is making efforts to comprehensively recover valuable metals and rare metals in the smelting process and strengthen the layout of “three rare” metals, which is expected to contribute new performance growth points.

Profit prediction & investment advice

The company's revenue for 24-26 is estimated to be 70.7/74.7 billion yuan, net profit to mother is 1.031/1.198/1.203 billion yuan, EPS is 0.28/0.32/0.32, respectively, and the corresponding PE is 17.92/15.42/15.35 times, respectively. Maintain a “buy” rating.

Risk warning

The release of production capacity fell short of expectations; product prices fluctuated greatly; the risk of RMB exchange rate fluctuations.