Event: The company publishes its 2024 semi-annual report. 2024H1 achieved operating income of 273.091 billion yuan, +2.08% YoY, +7.66% YoY net profit, 4.993 billion yuan, +84.62% YoY; Q2 achieved revenue of 150.574 billion yuan, +7.71% YoY, +22.90% month-on-month, and achieved net profit of 1.901 billion yuan, +18.54% YoY and +10.90% YoY. Net profit after deducting non-return to mother was 3.186 billion yuan, +216.1% year-on-year, and +10.9% month-on-month, with steady growth in performance.

Performance analysis: Increased production and rising prices of major products led to increased performance. 24H1 net profit to mother was +0.02 billion yuan year on year. The main profit increase was gross profit, which was +4.439 billion yuan year over year. ① Volume: Production capacity increased steadily, and copper, gold, and sulfuric acid production all increased. In 2024 H1, the output of cathode copper/gold/silver/sulfuric acid was 1.175 million tons/72.06 tons/633.19 tons/3.2025 million tons, +18.89%/+31.02%/-6.48%/+19.96% year-on-year; copper processing product output was 0.8718 million tons, up 4.65% year on year. ② Price: Prices of major products have increased. The average price of 24H1 copper/gold/silver/Hubei sulfuric acid (no data from Jiangxi, replaced by Hubei) was 0.0746 million/ton, 523.07 yuan/gram, 6.8 yuan/gram, and 480.45 US dollars/ton, respectively, up 9.65%/20.44%/28.32%/37.22%, respectively. The average price of the TC spot index for copper concentrate was 13.27 US dollars/ton, a year-on-year decrease of 84%. Smelters effectively coped with the impact of falling processing costs through a high ratio of long order processing fees, inventory copper concentrate and copper scrap supply; ③ Profit and expense: 24H1, the company's gross margin was 4.10%, +0.62pct year over year; financial/sales costs/management expenses were +1.65%/+0.04%/-0.05% year-on-year, mainly due to changes in exchange profit and loss, increase in sales volume, and reduction in repair costs. The main deductions were investment income and impairment losses. Investment income was -2.31 billion yuan year-on-year, due to the increase in the price of the main product in the current period and loss of futures liquidation; impairment losses decreased by 0.739 billion yuan year-on-year due to the fall in copper prices at the end of June, increased preparation for falling inventory prices, and an increase in bad debts due to the fall in copper prices at the end of June.

The construction of the company's various projects is progressing steadily: the Kazakh tungsten ore project will achieve trial production in the third quarter. The mine will have a resource reserve of 0.2849 million tons, a production capacity of 0.01 million tons, and a grade of 0.226%; the underground and surface projects of the Wushan Copper Mine Phase III expansion project are progressing on schedule; all sub-projects of the Yinshan Mining 5,000 tons/day to Russia conversion project are progressing as scheduled; the Mexican slag beneficiation project strives to be put into operation within the year; Huadong Electric works 0.1 milliontons/year ( (Phase I) The new energy electromagnetic wire project was put into trial production in late April, and production schedules are being stepped up.

Future highlights: The largest copper production base in China, and the performance is expected to continue to grow. ① The company is an established copper mining enterprise with an annual production of over 0.2 million tons of copper, the largest copper production base, associated gold and silver production base, and an important sulfur chemical base in China; ② It has an integrated copper industry chain covering exploration, mining, beneficiation, smelting and processing, and has significant cost and brand advantages.

Investment advice: The company has outstanding advantages in the scale of the copper industry chain, and its performance is expected to continue to grow. We expect net profit to mother of 7.223/7.818/8.059 billion yuan in 2024-2026, respectively, and EPS 2.09/2.26/2.33 yuan/share, respectively. Based on the closing price of August 28, 2024, the company's 2024-2026 PE was 10/9/8 times, maintaining a “recommended” rating.

Risk warning: risk of copper price fluctuations, risk of TC/RC decline.