The company released its 2023 annual report: the company's revenue in 2023 was 186.269 billion yuan, up 7.68% year on year; net profit to mother was 8.25 billion yuan, up 35.98% year on year; net profit after deducting non-return to mother was 6.233 billion yuan, up 2.73% year on year. Among them, 2023Q4 revenue was 54.587 billion yuan, up 34.71% year on year and 21.42% month on month; net profit to mother was 5.807 billion yuan, up 663.07% year on year, up 233.74% month on month; net profit after deducting non-return to mother was 4.887 billion yuan, up 141.26% year on year, up 329.59% month on month.
Production in the mining sector increased across the board, and the disposal of Australian copper and gold business increased investment income:
Copper and cobalt production reached a record high, and prices were lowered:
(1) Price: In 2023, the price of cathode copper was 8,483 US dollars/ton, -3.57% year on year; the price of cobalt metal was 15.11 US dollars/lb, -50.12% year on year.
(2) Annual production and sales increased significantly: in 2023, copper production was 419,500 tons, +51% year over year; cobalt production was 55,500 tons, +173.71% year over year; cobalt sales volume was 29,700 tons, +62.02% year over year.
By the end of 2023, TFM had 139,800 tons of copper stocks and 371,000 tons of cobalt. In 2024, the company's copper production will guide 52-570,000 tons, and cobalt production will guide 60,000 to 70,000 tons.
(3) Profit: The gross profit of the copper sector was 11.142 billion yuan, the gross profit per ton was 283,000 yuan, the gross profit of the cobalt sector was 1.26 billion yuan, and the gross profit per ton was 22,700 yuan.
The production of tungsten and molybdenum remains the world leader, and the increase in molybdenum prices enhances performance:
(1) Price: In 2023, the price of black tungsten concentrate was 1,835 yuan/ton, +5.28%; the price of molybdenum concentrate was 3,870 yuan/ton, +37.43% year-on-year.
(2) Production remains high: in 2023, tungsten production was 7975 tons, +6.2% year over year; molybdenum production was 15,600 tons, +3.45% year over year. By the end of 2023, there were 1,074 tons of tungsten stocks and 815 tons of molybdenum.
In 2024, the company's tungsten production guide is 6,500-7,500 tons; molybdenum production is 12,000-15,000 tons.
(3) Profit: The gross profit of the molybdenum sector is 2.87 billion yuan, the gross profit per ton is 184,000 yuan, the gross profit of the tungsten sector is 880 million yuan, and the gross profit per ton is 110,000 yuan.
The decline in the production and marketing rate of phosphate fertilizer, and price correction suppresses performance:
(1) Price: In 2023, the price of ferroniobium was 47 US dollars/kg, +2.58% year on year; monoammonium phosphate was 556 US dollars/ton, -38.77% year on year.
(2) In 2023, niobium production was 9515 tons, +3.29% year over year; phosphate fertilizer (HA+LA) production was 1.168,200 tons, +2.28% year over year. As of the end of 2023, 831 tons of niobium were in stock and 111,11,000 tons of phosphate fertilizer were in stock. In 2024, the company's niobium production guide is 9,000-10,000 tons, and phosphate fertilizer production is 105-1.25 million tons.
(3) Profit: The gross profit of the niobium sector is 890 million yuan, the gross profit per ton is 93,500 million yuan, the gross profit of the phosphorus sector is 650 million yuan, and the gross profit per ton is 556 yuan.
The company's three fees have increased significantly, and the asset structure has been optimized. The company's three fees for the 2023 period were 5,546 billion yuan, an increase of 1,849 billion yuan over the previous year, mainly affected by higher US dollar interest rates and higher financial expenses. The balance ratio in 2023 was 58.40%, down 4.01pct from the previous year.
The increase in net profit due to increased return on investment. In 2023, the company's net profit to mother increased by 2.283 billion yuan year-on-year, mainly to dispose of increased profits from the Australian business.
A five-year plan was released with the goal of becoming a world-class copper producer:
The company proposed development goals for the next five years in its annual report, completed the goal of “moving to the next level” in the second step of the “three-step” strategy, and initially entered the ranks of world-class mining companies: achieving annual production of 80-1 million tons of copper metal, 90,000 to 100,000 tons of cobalt metal, 25-30,000 tons of molybdenum metal, and more than 10,000 tons of niobium metal. At the same time, it was indicated that this year is the first year that both TFM and KFM will enter production at full capacity. TFM will reach production in the first quarter and meet the standards in the second quarter. KFM must achieve stable production and high production, ensure that it produces more than 520,000 tons of copper and more than 60,000 tons of cobalt throughout the year, making the company one of the top ten copper producers in the world and maintaining the world's largest cobalt producer.
Since 2023, the strong restraint logic for copper concentrate supply has been continuously strengthened and verified. Spot TC has dropped sharply, and scarce resources have prepared the medium- to long-term upward trend in copper prices. We believe that in the current situation where concentrate supply/TC is at a historically low level, the smelting side is facing a reduction in volume, while production demand in the fields of home appliances, automobiles, etc. is impressive, and we are optimistic that copper prices will continue to break through upward throughout the year.
Investment advice:
We expect revenue of 2024-2026 to be 2127.89, 2293.51, and 230.047 billion yuan, respectively, and estimated net profit of 109.53, 118.53, and 12.476 billion yuan, corresponding EPS of 0.51, 0.55, and 0.58 yuan/share, respectively. Currently, the corresponding PE price is 15.4, 14.3, and 13.5 times. Maintaining the “Buy-A” rating, the 6-month target price was adjusted to 10.2 yuan/share.
Risk warning: Demand falls short of expectations, commodity prices fluctuate greatly, and project progress falls short of expectations.