The company is the world's leading copper producer: the company has been deeply involved in Zambia and the Democratic Republic of the Congo (DRC) for many years, focusing on the vertical integrated business of copper mining, mineral processing, hydrometallurgy, pyrometallurgy and sales. The company produced 285,700 tons of crude copper and anodized copper in 2023, and produced 142,400 tons of cathode copper; in addition, the company is committed to the development of mine resources. Copper production from its own mines is the company's core business. In 2023, the company produced a total of about 169,300 tons of copper from its own mines, an increase of 12.01% over the previous year, and a raw material self-sufficiency rate of 39.55%. The company values investor returns. It plans to distribute cash dividends of about US$111 million in 2023. The dividend rate is at the leading level in the same industry, and has maintained a dividend rate of around 40% for 4 consecutive years.

The company's own mines produce close to 170,000 tons of copper per year, which is expected to gradually increase to about 300,000 tons in the medium to long term: the company's main mining projects in Zambia and the Democratic Republic of the Congo (DRC) mainly include the Champihi main, Western and southeast Champihi mines, the Chuansha Muliahi Open Pit Mine, the Chambi Shifamubashi mine, and the main ore bodies of the Gangbov mine. In 2023, the company produced about 88,700 tons of crude copper and anode copper in its own mines, and about 81,700 tons of cathode copper, totaling about 169,300 tons. The cost of copper produced in the company's own mines is relatively stable, and rising copper prices can bring greater profit flexibility to the company. In addition, the company currently has 4 mining projects under construction and preparation, including the Chineseluanshabaruba open pit project, the Gangbov Mensesa ore project, and the Chambisi Southeast ore project. After all of the above 4 projects are put into operation and production, the company is expected to add 130,000 tons of copper production capacity per year. On the basis of the annual copper production capacity of its own mines of about 170,000 tons in 2023, the annual copper metal production rate of its own mines is expected to reach about 300,000 tons. 8%

Resource scarcity is driving copper prices upward over a long period of time: In the short term, the most prominent contradiction at the industrial level is the shortage of copper ore. Especially after the Panamanian copper mine was discontinued, the impact continued. The spot processing fee index fell below 10 US dollars/ton, driving copper prices upward. From a medium- to long-term perspective, the global non-ferrous mining industry's capital expenditure has generally been insufficient in the past ten years, and the difficulty of newly discovered copper ore has increased significantly, limiting the space for medium- to long-term copper supply; on the demand side, copper is a key metal for the development of the new energy sector, and fields such as wind power, photovoltaics, and new energy vehicles will drive the increase in copper demand; therefore, the problem of insufficient supply of global copper in the medium to long term may gradually become prominent.

Profit forecast and valuation: The company's copper production continues to increase, and it is expected to fully enjoy the profit flexibility brought by the rise in copper prices. The net profit for 2024-2026 is estimated to be US$4.04/4.50/486 million (+45.5%/11.4%/8.0%), respectively, and EPS of 0.10/0.12/0.12, respectively. Through multi-faceted valuation, the reasonable valuation of the company is expected to be between HK$9.79-10.51, with a dynamic price-earnings ratio of about 12-13 times in 2024, with a 41-51% premium over the current stock price. It was covered for the first time, giving it a “superior to the market” rating.

Risk warning: the risk that the sales price of mineral products does not meet expectations, the risk that the company's project construction progress does not meet expectations, and the risk of changes in policies related to mineral resources in overseas countries.