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紫金矿业(601899):跨越周期 创新驱动铸就全球综合性矿业巨头

Zijin Mining (601899): Driven by cyclical innovation to create a global comprehensive mining giant

tianfeng ·  Dec 2

A large comprehensive mining giant with a global layout, striving to become world-class in 1993. The company started at the Zijinshan Gold Mine. After 30 years of leapfrog development, the company has transformed from a small county enterprise into a large-scale multinational mining group with the world's top 500 and a world-renowned global reputation. In the third decade of global development, the company achieved a significant increase in resources and production capacity. Currently, it has important mining investment projects in 17 domestic provinces (regions) and 15 overseas countries. It has become the metal mining enterprise with the largest reserves of copper, gold and zinc resources, the largest output, and the best comprehensive benefits in China. At the board meeting on May 16, '24, the company further refined the company's main mineral production planning targets for the next five years, and proposed striving to achieve the main economic indicators for 2030 2 years ahead of schedule (until 2028), and continue to advance towards the development goals of a top-class international mining group.

Copper and gold double main business, comprehensive layout of global polymetallic resources

Resources are king. Deeply involved in the mining industry for more than 30 years, the company already has a world-class diversified mining asset portfolio such as copper, gold, lithium, and molybdenum. As of 24H1, the company has equity resources: 80.75 million tons of copper, 30.51 million tons of gold, 10.45 million tons of lead (zinc), 13.47 million tons of lithium carbonate equivalent (LCE), 0.0181 million tons of silver, and 3.41 million tons of molybdenum. The main minerals copper and gold resources and production capacity are leading in China and rank among the top ten in the world. According to the company's latest five-year plan, copper production will reach 1.5-1.6 million tons and gold production will reach 100-110 tons by 2028. We estimate the compound growth rate of the company's copper/gold production in 23-28 was 8.9%/9.1%, respectively, and the main copper and gold industry will continue to advance. In terms of potential minerals, relying on the company's independent technology and engineering capabilities, it is expected to rank among the world's most important producers of lithium, molybdenum, and silver in the next five years.

Core competitiveness: Technological innovation injects strong impetus. Countercyclical mergers and acquisitions+independent prospecting shape resource advantage “Technology creates purple gold” is a true picture of the company's development history over the past 30 years since its establishment. The company has embarked on a path of innovation and development in China's mining industry. In the initial exploration and development of the Zijinshan low-grade gold and copper mine, the company established the “five rings of ore flow to one” mining engineering management model, which has since become a “powerful tool” for the company to participate in global mining competition.

Continuous technological innovation and technology export capabilities have given the company's low cost competitive advantage and “purple gold speed”. In 2023, the company's copper C1 cost and gold AISC cost are in the top 20% of the world. Furthermore, the company has excellent countercyclical mergers and acquisitions & resource judgment, seizes historical opportunities, insists on combining independent prospecting and resource mergers and acquisitions, and fosters resource advantages at low cost and efficiency around the world. In the future, we believe that technology will continue to empower companies to develop, and in an era where frequent risk events go hand in hand with the proliferation of money and credit, both resource advantages will continue to be highlighted.

Copper and gold have entered an upward cycle, and the company is expected to welcome a double hit from Davis

As a typical copper and gold double main company, the company's stock price performance and profit are highly correlated with copper and gold prices. Looking ahead to the future market, we believe that under the conditions of insufficient capital expenditure and poor resources in the early stages, the copper concentrate supply-side constraints have been shaped, and the medium- to long-term copper price center is expected to rise steadily. At the same time, Trump's second inflation logic in the new term may continue to be interpreted over the next four years, and the old and new paradigms will jointly support the bullish price of gold. Copper and gold entering an upward cycle may effectively support the company's profit and stock price. Combined with clear development goals and outstanding alpha capabilities, the company is expected to face a double blow from Davis.

Profit forecast and investment suggestions: We expect the company to achieve net profit of 32.88/37.05/41.37 billion yuan in 24-26, corresponding to the closing price PE on November 29 of 12.7/11.3/10.1x, respectively. Referring to comparable companies, the 25-year PE 14x will be given, corresponding to a target share price of 19.5 yuan/share, and for the first time coverage will be given a “buy” rating.

Risk warning: the risk of price fluctuations of major products; geopolitical and policy risks; exchange rate risks; safety, environmental protection and natural disaster risks; estimates are subjective.

The translation is provided by third-party software.


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