Zijin Mining Group's main business is copper and gold, we do a growth analysis of Zijin Mining Group in the next 5 years from the two aspects of copper and gold.

In the first half of 2020, the gross profit of the copper business accounted for 37.35% of the group's gross profit, while the gold sector accounted for 38.6% of the group's gross profit. It's basically neck and neck.

The international gold price in the first half of 2020 was US $1645 / oz, up 26% over the same period last year.

The international copper price in the first half of 2020 was 5500 US dollars / ton, down from 6039 US dollars / ton at the end of the previous year; the copper price in the first half of 2020 was lower than the same period of the previous year.

The company's gold output was 20.24 tons, up 6% from the same period last year; mineral copper output was 23.07%, up 35% from the same period last year.

The company's net profit increased by 30.6% in the first half of 2020, mainly due to the price-based volume and price take-off of gold, while the copper business increased in volume and fell in price.

Starting from the second half of 2020, international copper prices rebounded.

There are many factors contributing to the rebound in international copper prices:

1. The global monetary policy of quantitative easing has led to an overall rise in asset prices.

2. The economic recovery that began in the second half of 2020 has contributed to the expansion of short-term demand.

3. The global development of clean energy to reduce carbon emissions has increased the long-term demand for copper. Primary copper demand is likely to grow to 31 million tonnes by 2035, up 43 per cent from the current 22 million tonnes, according to the McKinsey Global Institute. (from the mining industry)

Therefore, we believe that the international copper price will remain high for a long time.

Goldman Sachs Group raised the international copper price for the next 3, 6 and 12 months to US $8500, US $9000 and US $10000 per ton in January 2021.

ANZ expects the average copper price to be $8030 / tonne in 2021 and $8670 / tonne in 2022

Commerzbank expects copper prices to average $6161 a tonne in 2020 and $7600 a tonne in 2021.

No matter which agency's forecast, we can see that relative to the mid-2020 copper price of $5500 / tonne; the 2020 average price of $6161 / tonneAll agencies give very high expectations for copper prices in 2021 and 2022.

In other words, even if Zijin Mining Group's copper production remains unchanged in 2021, its mineral copper earnings will increase greatly in 2021.

The following information comes from Zijin Mining Group's performance forecast for 2020:

Combined with the semi-annual report data, we can see that Zijin Mining Group's performance growth in 2020 is mainly due to the increase in gold prices and copper production. Among them, copper contributes more.

As the icon above is Zijin Mining Group's five-year plan, I can see that Zijin Mining Group's gold production will increase by about 75 per cent in 2022 and copper production by about 80 per cent.

Combined with the international copper price estimates we have seen in 2021 and 2020, we can easily conclude that Zijin Mining Group's net profit in 2022 will increase by more than 100% compared with 2020. Dynamic PE will also drop from 40 today to less than 20.

In addition, we are full of confidence in the long-term development of Zijin.

Zijin has gold reserves of 1728 tons and copper reserves of 49.52 million tons in 2018.

In 2019, Zijin has gold reserves of 1887 tons and copper reserves of 57.25 million tons.

In 2020, the company has more than 2000 tons of gold and more than 62 million tons of copper (semi-annual report data).

Generally speaking, combined with Zijin Mining Group's reserve growth rate, the space to increase production and the future growth of international copper demand. We can expect Zijin Mining Group to maintain a state of sustained growth in the next 5-10 years.

For Zijin, at present, I do not treat it as a cyclical stock, but as a growth stock.

that,Where is the risk of investing in Zijin Mining Group?

On the one hand, the demand for copper is not so large in the future, and second, even if there is demand, there is enough production capacity to match. Supply does not fall short of demand. For the future demand, we can only make a preliminary judgment on the basis of qualitative analysis and combined with the information of some consulting bodies.

On the supply side, there are two data for our reference:

Copper, as a strategic base metal, is a non-renewable resource, and the global demand for copper continues to increase, but due to the limitations of ore-forming geological conditions, the discovery of copper deposits is becoming more and more difficult.According to S & P, 15 new copper mines were discovered in the world from 2011 to 2020, compared with 87 in the previous decade (2001-2010). The discovery cost per ton was US $318.75 per tonne, 10.3 times that of a decade ago (US $30.85 per tonne).

B. The following is the production capacity planning of the major mines in the next two years.

We can see that the production capacity of all the major mines in the world, with the exception of Freeport and Zijin Mining Group, remains basically unchanged, or even shrinks slightly.

In fact, it is quite difficult to invest in such a long-term variety of minerals, especially at present, Zijin Mining Group's valuation is not low. You still need to be more cautious.