Core views:
Volume increased and decreased in 24Q1, revenue +8.4% year over year, and net profit to mother -24% year over year. Performance was in line with expectations. According to the 2024 quarterly report of Jinmoli Co., Ltd., the 24Q1 company's revenue and net profit to mother were about 28.67 million yuan and 633 million yuan respectively, +8.4% and -24% year over year, and +7.1% and -16.9% respectively compared to 23Q4. The 24Q1 company achieved stable and high production, but due to the year-on-year decline in product market prices, net profit to mother decreased year-on-year. According to Wind data, as of April 25, 24, the average price of 24Q1-2 molybdenum (Henan: 45% molybdenum concentrate) was about 330,000 yuan/ton, and the price of molybdenum rose rapidly in the late 24M4 period. On April 25, it was 370,000 yuan/ton. The contradiction between supply and demand in the industrial chain gradually became apparent.
I am optimistic about long-term continuous and stable high percentage dividends. According to Wind data, the company has maintained a high overall dividend ratio since its listing, with a cumulative cash dividend of 9 billion yuan (including proposed dividend data from the 23 annual report), and the overall average dividend rate is about 75%. The total proposed dividend for 23 is 1.29 billion yuan, with a dividend rate of 41.6%, and EPS of about 0.96 yuan/share, estimated at the closing price of April 25, 2024, corresponding to a dividend rate of 3.4%.
Molybdenum supply restrictions are expected to promote a steady rise in molybdenum prices: global molybdenum supply is expected to increase by about 2% to 3% in 24-26, and the aging of mines poses a major challenge to molybdenum supply. According to IMOA, companies' annual reports and production and operation announcements, we estimate that global molybdenum production in 24-26 will be 29.0, 29.7, and 3.0 million tons, respectively, 2.1%, and 2.5% compared with the same period. 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 1.13/1.25/1.39 yuan/share in 24-26, the PE corresponding to the closing price on April 25, '24 is 11/10/9 times, and the average PE value of the company has been 15 times since the beginning of '22. 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 13 times in 24 years, with a corresponding reasonable value of 14.65 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.