Introduction to this report:

Longjing Lianhui plans to acquire 15.87% of Hunan Chuangyuan's shares, a leading supplier of integrated solutions for intelligent mining in China, to further improve the company's industrial distribution in the new energy mining equipment business.

Key investment points:

Incidents:

Longjing Lianhui, a wholly-owned subsidiary of the company, plans to acquire 15.87% of Hunan Chuangyuan's shares.

Reviews:

Maintain an “Overweight” rating. We maintain our forecast net profit for 2024-2026 at 1.204, 1.524, and 1.934 billion yuan respectively, corresponding EPS of 1.11, 1.41, and 1.79 yuan, respectively, and maintain a target price of 16.65 yuan, maintaining a “gain” rating.

Acquired 15.87% of Hunan Chuangyuan's shares to further improve the company's industrial layout in the new energy mining equipment business. 1) Long Jing Lianhui, a wholly-owned subsidiary of the company, plans to use 63.4899 million yuan of its own capital to transfer a total of 15.87% of the shares in Hunan Chuangyuan held by Jiaxing Kai Fu, Fuzhou Kai Fu, Xiang Jiang Kai Fu, natural persons Wang Yi and Fang Xiaoxuan. After the transaction is completed, Longjing Lianhui will directly hold 15.87% of Hunan Chuangyuan's shares. Zidi Investment, controlled by Zijin Mining, the controlling shareholder of the company, currently holds 7.69% of Hunan Chuangyuan's shares. 2) Hunan Chuangyuan achieved net profit of 23.66 and 4.71 million yuan respectively in 2023 and January-August 2024.

The company has made sufficient reserves for the smart new energy mining card strategy, and the black light mine forms a closed loop with heavy trucks.

1) Hunan Chuangyuan is a leading supplier of integrated solutions for intelligent mining in China. It integrates mining technology, intelligent equipment and centralized control platforms to achieve autonomous operation of intelligent equipment. It has a complete range of intelligent mining equipment, covering the entire intelligent operation of the mine's “development”, “approval”, “cutting” and “recycling” processes. 2) The company's main product, patio drilling rigs, has the highest market share in the country. The performance parameters have reached the leading international level, and domestic production has been replaced and exported to foreign countries. 3) The company's intelligent mining equipment capability leads the industry, independently develops intmine intelligent mining systems, and highly integrates mining technology, mining equipment and intelligent systems to make underground and open pit mining fields unmanned. 4) Hunan Chuangyuan has leading mining equipment integration capabilities in the industry. The whole machine uses a modular design, which can adapt to mines with more complex working conditions, reducing costs and increasing efficiency for mining enterprises.

The company is actively advancing its new energy transformation and is developing in the direction of Zijin's capital expenditure and cost expenditure. 1) In terms of the landscape green power business: The first phase of the Laguocuo energy supply project in Tibet and the first 300MW photovoltaic project in Wucha in Kezhou, Xinjiang successfully generated electricity, and the projects under construction are progressing steadily. 2) In terms of green mining business: Start a comprehensive solution business for green new energy mining equipment, carry out pure electric mining card sales, storage and exchange power plant construction and operation business, and continue to open up room for growth.

3) In terms of energy storage business: The production capacity of the first energy storage cell production line is gradually rising, and the yield rate is steadily increasing. The energy storage PACK and system integration business are simultaneously expanding domestic and foreign markets, speeding up the development of high-capacity cell energy storage system technology, and making positive progress.

Risk warning: Flue gas equipment sales, project management, and new energy business development fall short of expectations, etc.