Events:
The company recently released a three-quarter report that the company's operating income in the first three quarters was 7.429 billion yuan, an increase of 37.41% over the same period last year, and the net profit belonging to shareholders of listed companies was 186 million yuan, an increase of 40.63% over the same period last year. Of this total, the operating income in the third quarter was 3.008 billion, an increase of 64.17% over the same period last year, and the net profit attributed to shareholders of listed companies was 68 million yuan, an increase of 29.53% over the same period last year.
Viewpoint:
Affected by maintenance in the third quarter, the profit growth rate has slowed down, and the performance in the fourth quarter has returned to high growth. The increase in silver production brought about by additional projects issued by the company in 2017 is relatively obvious, as the impact of equipment maintenance and gross profit margin is phased, the company's performance in the fourth quarter will return to normal, and the performance growth rate will be much higher than that in the first three quarters. Silver production and gross profit margin will obviously pick up, lead matte projects will begin to release performance, and comprehensive recycling projects will gradually contribute profits, we estimate that the single-quarter performance is expected to be close to 100 million yuan.
Gold and mining have entered the performance harvest period. As the upstream resource assets acquired by the company in the early stage, after a gradual run-in between last year and the first half of this year, the future production capacity and output will be significantly increased, and the company's performance will be significantly improved. in particular, it will play a better role in promoting the company's overall raw material self-sufficiency rate. There is a direct reason why the company's gross profit margin has decreased in three quarters and the proportion of outsourced mines is higher, with the volume of gold and mining industry. The company's overall gross profit margin will increase significantly.
The lead matte project has great potential. Lead matte project is a comprehensive utilization project with international advanced level built by the company using its own technology. at present, the company has built 5000 tons of cathode copper production capacity, but also can produce 20,000 tons of lead fine powder, and can recover 5000-6000 tons of lead, 60-6000 tons of silver, gold 200KG and valuable metals such as antimony and bismuth, with an annual profit of more than 100 million yuan. The company can integrate raw material resources by establishing industrial parks in surrounding areas. Expanding the production capacity of lead matte project will become a major profit growth point for the company in the future.
The trend of a big rise in precious metal prices and a small return will continue. The price of precious metals is closely related to the trend of the dollar index and the inflation level of US profits. In the short term, the US dollar index is still in the stage of overfalling and rebounding, and interest rate increases are still ongoing, which has a certain suppressing effect on precious metals prices, but in the medium term, the depreciation of the US dollar and interest rate increases are intertwined, especially the periodic upward momentum of precious metals prices brought about by the uncertainty of the interest rate hike cycle. We are optimistic about the rising trend of precious metals prices in the medium term.
Conclusion:
In 2017, as the company's IPO investment project entered the mature stage, the additional issuance project began to expand, and the company's performance increased significantly. Under the background that silver prices basically remained volatile, the company's profit growth rate in the first three quarters reached 40%. The company's performance in the fourth quarter will enter the stage of accelerated recovery growth. Next year, with the increment of gold and mining, lead matte, silver issuance projects and the increment of gold products. We expect the company to maintain super-rapid growth in 2018, and valuations are still cheap. The company said that it will increase the acquisition of upstream resources in the future, and resource integration will bring greater performance flexibility in the future. Junlong Mining acquisition is just the beginning, and the future is worth looking forward to.
We estimate that the company's income will be 101.93, 142.01 and 17.532 billion in 2017-2019, the net profit in 2017-2019 will be 2.93,5.54 and 690 million respectively, and the EPS in 2017-2019 will be 0.52,0.98,1.22 respectively, and the corresponding PE will be 37.31,19.73,15.83 times respectively. We think it is reasonable to give the company a valuation of 30 times PE in 2018, with a 6-month target price of 29.4 yuan.