Main points of investment:

Established copper enterprises, covering mine copper-copper smelting-copper processing industry chain. By the end of 2021, the group has retained copper reserves of 2.91 million tons. In 2022, the company's self-produced copper concentrate contains 51600 tons of copper, 1.6287 million tons of cathode copper, 390900 tons of copper processing materials and 4.9538 million tons of sulfuric acid. Subsequent investment in the construction of high-end copper wire production capacity of 500,000 tons / year, by-product sulfuric acid 1.7 million tons / year.

With a 70 per cent stake in the Mirado Copper Mine, we expect Vision's mine copper production capacity to increase from 50, 000 tons to 250000 tons. 1) the purchase consideration is low, with open-pit copper reserves of 6 million tons. The company will increase 5.67 billion + convertible bonds 330 million + cash 670 million to buy CCCC Copper Crown, which is 70% owned by the group. the net profit of the underlying company in 2022 is 1.81 billion yuan, and the 100% equity purchase consideration is 9.53 billion yuan, which corresponds to a PE multiple of only 5 times. 2) after the expansion of the second phase of Mirador Copper Mine, the mine copper production capacity has been increased to 200000 tons, and the total copper production capacity of the corresponding company has been expanded to 250000 tons: the core asset of China Railway Construction Copper Crown is Midora Copper Mine (copper reserves of 6 million tons, grade 0.48%, opencast mining). The first phase of copper concentrate production capacity is 90,000 tons (put into production in 2019 and reach production in 2021), and the planned second phase will add about 110000 tons of copper concentrate capacity (expected to be completed in June 2025 and reach production in 2027). After the expansion of the second phase, the capacity of the Milado copper mine is expected to increase to 200000 tons. In addition, we expect the company's domestic copper production capacity to be maintained at 50,000 tons. 3) performance commitment: the commitment period is 2022H2-2027, with a cumulative deduction of 4 billion yuan in non-net profit and a net profit of 1.21 billion yuan in 2027.

Copper crown copper foil: one of the leading domestic enterprises in the production of high-performance electronic copper foil products, 22 years electronic copper foil production capacity of 55000 tons, output of 42000 tons, the future total production capacity is expected to rise to 80,000 tons (lithium copper foil 45000 tons + PCB copper foil 35000 tons).

For the first time, the overweight rating was given. The company is a leading company in cathodic copper smelting in China, and its smelting capacity is second only to Jiangxi Copper. After the injection of Mirador Copper Mine, the nominal production capacity of copper has increased from 50,000 tons to 250000 tons, and the production capacity of rights and interests has increased from 50,000 tons to 190000 tons, which will fully benefit from the long-term rising cycle of copper. It is estimated that the annual net profit in 23-24-25 is 35.5 million PE, corresponding to X. in 12-10-9, the overweight rating is given for the first time.

Risk hints: copper prices fall, copper development progress is not as expected, and copper foil expansion projects are not as expected.