In '23, the company achieved net profit of 3,099 million yuan, maintained that the “increase” rating company achieved revenue of 11,531 billion yuan (yoy +20.99%) in 23, achieved 109.92% of the annual operating plan target, and net profit of 3.099 billion yuan (yoy +132.19%); 23Q4 revenue of 2,678 million yuan (yoy +8.65%, qoq -19.88%), net profit to mother (yoy +110.88%, qoq -9.68%). The price of molybdenum fell from a high point in 23Q3. The current molybdenum price is lower than our previous expectations, so we lowered the 24-year average molybdenum price assumption; however, with the support of domestic economic stimulus policies, the medium- to long-term fundamentals of molybdenum may improve, so the 25-year molybdenum price assumption was raised; and considering company cost control, the final net profit of the company is expected to be 31.19/31.35/3.155 billion yuan respectively in 24-26 years (previous value: 35.00/24.40/- billion yuan). Comparatively, the company's 24-year Wind unanimously anticipated PE 15.8X, giving the company 15.8XPE in 24, corresponding to a target price of 15.29 yuan (previous value of 12.79 yuan), maintaining an increase in holdings rating.
Molybdenum prices rose a lot in '23, and the performance was impressive
The company's profitability and profit are linked to molybdenum prices: According to Wind, the average price of pure molybdenum in '23 was 5312,000 yuan/ton, up 34.79% year on year. As a result, the company's profitability increased significantly, achieving a gross profit margin of 47.96%, up 13.19 pcts year on year. However, the cost rate increased slightly by 0.27 pct to 7.11% during the period, with the R&D cost rate rising 0.80 pct to 2.91%, mainly due to the company's continuous efforts to innovate in 23 years, such as 1) implementing 49 scientific research projects, with a cumulative R&D investment of 336 million yuan, laying the foundation for a three-year review by high enterprises; 2) overcoming the problem of removing impurities from ultra-pure molybdenum powder and having the ability to stably produce 4N grade high-purity molybdenum powder in batches; prepared a series of molybdenum rhenium alloy tube products, and obtained the first batch of 4.82 million procurement contracts from customers, etc.
The global leader in the molybdenum industry chain, rich in resource reserves
The company is a highly influential supplier of pure molybdenum in the global molybdenum industry. It is mainly engaged in the production, marketing and research of molybdenum series products and the trade and operation of molybdenum related products. It produces three series of high-quality products: molybdenum furnace materials, molybdenum chemicals, and molybdenum metal deep processing. The company has abundant molybdenum resource reserves as a raw material guarantee. Currently, it operates two large-scale open-pit molybdenum mines: Jinduicheng molybdenum ore has rich reserves, high grade, low content, and product quality suitable for deep processing. By the end of '23, the resource volume was 451 million tons, the average grade was 0.083%, the service period was 34 years, and the annual output was 13.517 million tons; Ruyang Donggou had molybdenum ore resources of 462 million tons by the end of '23, with an average grade of 0.12%, annual output of 9.581 million tons. In addition, the company also shares in the Shapinggou Molybdenum Mine and the Jide Molybdenum Mine, both of which will contribute profits after production is put into operation.
Steady management and positive feedback to shareholders
According to the company's annual report for the year 23, the company plans to achieve revenue of 13 billion yuan in 2024. According to the “Notice Concerning the Controlling Shareholder Increase Plan” (24-2-28), Gold and Molybdenum Group, the controlling shareholder of the company, plans to increase its holdings of the company's shares by 10-20 million within 6 months from February 29, 2024. Prior to this increase plan, the shareholding ratio of Golden Molybdenum Group was 72.02%. The company values shareholder feedback and achieved a dividend rate of 41.64% in 23; the cumulative dividend rate since listing in 2008 was 78.56%.
Risk warning: Downstream demand fell short of expectations, and molybdenum production growth exceeded expectations.