整合江洛矿区，采选规模与业绩有望双升。公司地处甘肃陇南市，拥有全国储量第二的西成铅锌矿，陇南市目前正围绕成县厂坝-西和大桥-礼县李坝金铅锌资源基地，以西成铅锌矿集区、礼岷金矿集区为重点，加快矿山兼并重组和“攻深找盲”行动。公司计划投资约50 亿元，对徽县江洛矿区进行整合。江洛矿区位于西成铅锌矿集区核心，是陇南市有色矿产开发格局中的重要一环，公司将充分利用陇南矿产资源优势以及上市公司绿色矿山建设经验优势，有望实现公司二次腾飞。达产后，可新增铅锌产量15 万吨/年，按照5 年一期均价、最高价、最低价以及当前价（税后）假设，达产后预计净利润分别为6.74、13.37、-0.40 和12.15 亿元。且吨成本仍有下降空间，假设采选成本降至现有矿山采选成本，即由338 元/吨降至265元/吨（现有矿山成本），或可再增厚净利润1.86 亿元。Key points of investment:
Regional lead-zinc leader, employee shareholding promotes high-quality development. Jinhui Co., Ltd. is a regional leader in lead and zinc mining, located in Longnan, Gansu. The business development is steady, and revenue & gross profit are growing rapidly with production capacity. In July 2022, the company plans to raise no more than 0.22 billion yuan to implement the employee stock ownership plan. As of February 15, 2023, it has purchased a total of 16.48 million shares, with an average transaction price of 12.79 yuan/share. The actual controller, Li Ming, provided a back-up guarantee for this employee shareholding plan, demonstrating confidence in future development.
The amount of resources collected and the scale was further increased, and a profit moat was built at a low cost. As of June '24, the company had a total reserves of 2.4115 million metal tons of lead and zinc (mining rights only), an annual mining capacity of 1.78 million tons/year, and a mineral processing capacity of 1.83 million tons/year. The procurement scale increased by 0.28 million tons/year and 330,000 tons/year, respectively, compared to the beginning of the market. In terms of resource endowments, the company's Guojiagou ore grade of 3.96% is in the lower middle position compared to peers (average 8.49%), and the resource endowment is not high. However, the company relies on efficient management and advanced mining processes, and the cost per ton of zinc concentrate remains around 0.004-0.005 million/ton, and the average net profit per ton of lead concentrate (containing silver) remains around 0.002-0.003 million/ton. The average net profit per ton under full production (2020-2022) is higher than 0.0057 million/ton Comparable companies (0.0041 million yuan/ton), build a profit moat at a low cost.
By integrating the Jiangluo mining area, the scale and performance of mining are expected to both increase. The company is located in Longnan City, Gansu Province, and has the Xicheng Lead-Zinc Mine, which has the second-largest reserves in the country. Longnan City is currently focusing on the Chengxian Changba-Xi-Daqiao-Lixian Liba Gold Lead-Zinc Resource Base, focusing on the Xicheng Lead-Zinc Mining Cluster and the Limin Gold Mine Cluster to accelerate mine mergers and restructuring and the “deep search for blindness” operations. The company plans to invest about 5 billion yuan to integrate the Jiangluo mining area in Huixian County. The Jiangluo mining area is located at the core of the Xicheng lead-zinc mining complex. It is an important part of the nonferrous minerals development pattern in Longnan City. The company will make full use of Longnan's mineral resource advantages and the advantages of listed companies' green mine construction experience, and is expected to achieve the company's second take-off. After delivery, lead and zinc production can be increased by 0.15 million tons/year. According to the five-year average price, highest price, lowest price, and current price (after tax) assumptions, the estimated net profit after delivery is 6.74, 13.37, -0.40, and 1,215 billion yuan, respectively. Moreover, there is still room for reduction in the cost of a ton. Assuming that the extraction cost is reduced to the existing mining cost, that is, from 338 yuan/ton to 265 yuan/ton (current mine cost), the net profit can be increased by 0.186 billion yuan.
The mine side is shrinking, and high profits are expected to continue. Since this year, lead-zinc ore side supply has shrunk markedly, and the monthly concentrate production has continued to hit a new low in the past five years. Affected by the contraction of the mine side, the refining side is in a tight balance, and concentrate prices continue to rise. At the same time, due to the shortage of minerals, smelting and processing costs have declined sharply. Under the dual catalysts of rising mineral prices and falling smelting and processing fees, mining companies' profits have continued to expand.
Profit forecast and rating: We expect the company's net profit attributable to the parent company's owners in 2024-2026 to be 0.498, 0.705, and 0.934 billion yuan, respectively, and the corresponding PE is 24X, 17X, and 13X, respectively. Since the company's growth is relatively more certain, it has a high margin of safety. Covered for the first time, a “gain” rating was given.
Risk warning. The risk that the integration progress falls short of expectations; the risk of metal prices falling beyond expectations; the risk of production safety; the risk of new equity pledges; and the risk of profit estimation deviations in the Jiangluo mining area.