Key points of investment:

The largest copper production base in China, with an annual output of over 0.2 million tons of copper. The company is the largest copper production base in China, the largest production base for associated gold and silver, and an important sulfur chemical base. By the end of '23, the company's 100% ownership of resources was around 8.74 million tons of copper, 244 tons of gold, 8046 tons of silver, and 0.16 million tons of molybdenum. The amount of metal resources controlled by the company and other companies is about 4.435 million tons of copper and 52 tons of gold based on the company's equity. The company owns five production mines with 100% ownership:

Dexing Copper Mine, Yongping Copper Mine, Chengmenshan Copper Mine, Wushan Copper Mine and Yinshan Mining Company, as well as five production smelters and ten modern copper processing plants. The company produces more than 0.2 million tons of copper per year in copper concentrates, more than 2 million tons of cathode copper per year, and more than 1.8 million tons of processed copper products per year. Among them, the company's 2021/2022/2023 mineral copper production was 0.2023/0.2044/0.202 million tons, respectively.

The company has a complete integrated copper industry chain, with significant cost and brand advantages. The company has established a complete industrial chain integrating exploration, mining, beneficiation, smelting and processing in the field of copper and related non-ferrous metals.

The Dexing Copper Mine owned by the company is the largest open pit copper mine in China, and the unit cash cost is lower than the industry average; at the same time, the advantages of mine resources further guarantee the self-sufficiency rate of copper concentrate, which is conducive to the company smoothing the risk of fluctuations in raw material costs. The Guixi smelter owned by the company is the largest single smelter in the world. It is technologically advanced and has scale effects, giving the company a cost advantage. Furthermore, the company “Guiye Brand” cathode copper was successfully registered with LME as early as 1996, and is the first global copper brand in China. The company is also the first company in the Chinese copper industry to register the three major products of cathode copper, gold and silver in LME and LBMA, and has established long-term good partnerships with world-class mining companies.

Accelerate project construction to create a continuous growth pole for the company. The company is actively expanding its business. Among them, after the completion and delivery of the Wushan Copper Mine Phase III expansion project, 10,000 tons of ore can be selected per day, bringing the company 1.161 billion yuan in sales revenue and 0.13 billion yuan in profit. Currently, the main projects have all been completed beyond schedule. The construction of Yinshan Mining's 5,000 tons/day to underground mining project began in November. After delivery, the Jiangtong Huadong Copper Foil Shangrao lithium battery copper foil project can produce 0.1 million tons of lithium copper foil per year, adding about 10 billion yuan in annual revenue; at the same time, in 2023, Jiangtong Guoxing's 0.18 million tons/year cathode copper energy saving and emission reduction project was successfully put into operation, further consolidating the company's dominant position in the field of modern smelting; Huadong Electric's 0.1 million tons/year new energy electromagnetic wire project (Phase I) was put into early operation in just 158 days; Jiangtong Longchang Phase I North Line 0.035 million tons The renovation project and Jiangtong Taiyi Electric Enameled Flat Wire 4,000-ton production expansion project were successfully put into operation, and more than 400 types of products were developed and expanded.

Profit forecasting and valuation. We expect the company to gradually rise in copper prices and usher in a steady release of performance. We expect the company's EPS for 24-26 to be 2.09, 2.31, and 2.46 yuan/share, respectively. Referring to the valuation level of comparable companies, a PE valuation of 11-12 times in 2024 was given, corresponding to a reasonable value range of 22.99-25.08 yuan/share, which for the first time covered a “superior to the market” rating.

Risk warning. Risk of fluctuations in energy and raw material prices; risk of changes in the international trade environment; downstream demand falls short of expectations.