Incident Overview

The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 150.417 billion yuan, a year-on-year increase of 0.06%, achieved net profit of 15.084 billion yuan, an increase of 46.42% over the previous year, and realized net profit after deducting non-return to mother 15.433 billion yuan, an increase of 59.84% over the previous year. Among them, the 2024Q2 performance was impressive, achieving net profit of 8.824 billion yuan, up 81.54% year on year, 40.93% month-on-month, and achieving net profit deducted from mother of 9.209 billion yuan, up 114.85% year on year and 47.96% month-on-month, all of which hit record highs in a single quarter.

The level of gross margin increased across the board, helping to increase performance. At 24H1, the company's comprehensive gross margin was 19.15%, up 4.50 percentage points year on year and 2.13 percentage points month on month. Among them, the comprehensive gross margin of mining enterprises was 57.30%, up 5.55 percentage points year on year, up 10.64 percentage points from month to month. The increase was mainly due to: (1) the year-on-year increase in sales of mineral copper and mineral gold products; (2) the year-on-year increase in metal sales prices; (3) through cost control and efficiency, the cost of some mineral products decreased.

The volume and price of major mineral products such as gold and copper have risen sharply, and cost control is effective. (1) Price: Affected by global macroeconomics, etc., the prices of gold and copper reached record highs in the second quarter. The average price of Lunjin and Luntong 24H1 rose 14.03% and 5.46%, respectively. (2) Production: 24H1's mine produced 0.5186 million tons of copper, up 5.35% year on year, and 35.41 tons of mine gold, up 9.49% year on year.

Under the guidance of the “Five-Year Production Plan”, we believe that the production scale of the company's main mineral products is expected to increase year by year. (3) Cost: 24H1. The company's gold concentrate unit sales cost decreased by 2.50% year on year, down 6.73% month on month, copper concentrate unit sales cost decreased by 5.41% year on year, down 8.82% month on month. The company's cost control and efficiency efforts have achieved phased results, and the upward trend in costs has been contained.

Projects under construction are progressing steadily, opening up room for future growth. The Kamoa Copper Mine Phase III plant was completed and put into operation half a year ahead of schedule. After delivery, the annual copper production will increase to more than 0.6 million tons, making it the largest copper mine in Africa and the third largest copper mine in the world; the 2.4 million tons/year gold mining and 5 tons/year gold smelting project of the Sabayalton gold mine were completed and put into operation as scheduled. The Zitong and Saizijin projects with an annual total annual copper output of 0.45 million tons, the first and second phases of the Julong Copper Mine Phase II renovation and expansion project, the Heilongjiang Copper Mountain Mine, the first phase of mining in Aurora, Guyana, and the construction of the “Two Lakes and Two Mines” lithium sector are progressing in an orderly manner. The company has projects all over the world. As of 24H1, it has important mining investment projects in 17 provinces (regions) in China and 15 overseas countries, covering major minerals such as copper, gold, lithium, etc., and is making continuous progress towards the grand goal of becoming a “green, high-tech, and first-class international mining group”.

Investment advice

The company's copper and gold sector business is expanding rapidly, and copper and gold prices are expected to rise. We predict that the company's revenue for 2024-2026 will be 337.442/366.946/389.331 billion yuan, respectively, +15.01%/+8.74%/+6.10% year-on-year; net profit to mother will be 30.214/37.067/43.261 billion yuan, respectively, +43.06%/+22.68%/+16.71%, EPS 1.14/1.39/ 1.63 yuan/share, the corresponding PE price on August 27, 2024 was 14.14X/11.52X/9.87X, respectively. Maintain a “buy” rating.

Risk warning

Prices of gold, copper and other metals fell sharply; project progress fell short of expectations.