Benefiting from the rise in molybdenum prices, net profit to mother increased 134% year-on-year in 2023, and the results were in line with expectations. According to the 2023 annual performance report announcement of Jinmoli Co., Ltd. and the three-quarter report of 2023, the company's revenue and net profit to mother in 2023 were approximately 11.63 billion yuan and 3.13 billion yuan respectively, up 22% and 134% year-on-year respectively. According to Wind data, molybdenum prices fluctuated at a high level during 23 years, and the average price of 23Q1-4 molybdenum was 48, 34, 41, and 310,000 yuan/ton, respectively. As of January 24, '24, the average price of 24M1 molybdenum was 330,000 yuan/ton.
Maintain high dividends for a long time. According to Wind data, the company has maintained a high overall dividend ratio since its listing, with a cumulative cash dividend of 7.75 billion yuan. The overall dividend rate is about 87%, and the dividend rates for 21 and 22 are about 65% and 73%, respectively. In 2023, the company's EPS is about 0.969 yuan/share. Assuming a dividend rate of 70%, estimated at the closing price on January 24, 2024, the corresponding dividend rate exceeds 7%.
Molybdenum supply constraints are expected to promote a steady upward trend in molybdenum prices: global molybdenum supply is expected to increase by about -1.5%, 2.6%, and 1.3% in 23-25. Mine aging poses a major challenge to molybdenum supply. According to our “Molybdenum - Future Metals Driven by Cybertruck” released on December 14, 2023, global molybdenum production is estimated to be 25.8, 26.5, and 268,000 tons respectively in 23-25, or -1.5%, 2.6%, and 1.3% compared to the same period last year.
Due to the deepening depth of copper mining in South America and the gradual decline in grade, the aging of mines poses a great challenge to the supply of molybdenum.
Profit forecasting and investment advice: Give the company a “buy” rating. The company is expected to achieve EPS of 0.97/1.01/1.10 yuan/share in 23-25, PE corresponding to the closing price on January 24, 24 is 9/9/8 times, and the average PE value of the company since the beginning of '22 is 15 times. The company is a leader in the molybdenum industry. Considering that the company has benefited from the rise in molybdenum prices over a long period of time, the company was given a PE valuation of 14 times in 24 years, with a corresponding reasonable value of 14.12 yuan/share, giving the company a “buy” rating.
Risk warning. Stricter environmental standards have disrupted mine production or increased costs; trade protection may cause a decline in global economic growth to affect molybdenum demand; overseas copper-molybdenum companion mines may rapidly increase molybdenum supply by using molybdenum-rich and copper-poor copper mining methods, leading to a drop in prices.