On October 30, the company released its 2024 three-quarter report. In the first three quarters of 2024, revenue was 3.415 billion yuan, +73.71% year over year; net profit to mother was 0.54 billion yuan, +133.28% year over year. 3Q24's revenue was 1.161 billion yuan, -10.00% month-on-month, +68.40%; net profit to mother was 0.192 billion yuan, -14.25% month-on-month, +130.16% year-on-year.

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The rise in the price of antimony and tin led to a month-on-month increase in the company's gross margin. The prices of 3Q24's main products of antimony, tin, lead and zinc were +28.60%, +0.26%, +0.75%, and +0.88% month-on-month, respectively, and sales of lead-antimony concentrate, tin ingots and zinc ingots were -0.73%, -9.87%, and +8.14% month-on-month respectively. Thanks to price increases and mine operating rates, 3Q24's gross profit per unit of lead-antimony concentrate, tin ingots, and zinc ingots was +40.28%, +2.80%, and -4.17%, respectively. Taken together, 3Q24's gross profit and gross margin were +2.32% and +5.50pct month-on-month, respectively. The gross profit ratio of 3Q24's lead-antimony concentrate, tin ingots and zinc ingots was +9.21pct/-3.85pct/+0.15pct month-on-month to 34.74%, 36.88%, and 11.58%, respectively. Due to the large increase in the price of antimony, the company's gross margin level has increased, and the share of lead and antimony concentrate in gross profit has also increased significantly from month to month.

Expenses remained low during the period, and the capital structure continued to be optimized. The 3Q24 company's period expenses and period rates were -0.98%, +0.79pct to 0.101 billion yuan, and 8.70%, respectively; among them, management rates and financial rates were +1.19pct, +0.33pct to 6.46% and 0.95%, respectively.

The company's balance ratio at the end of 3Q24 was 36.22%, -3.31pct and -1.48pct month-on-month, respectively, and the capital structure continued to be optimized.

The mining rights application for the Copper Pit Mine was changed, the scope of the mining area was expanded and the number of minerals to be mined was increased. The company's application to change mining rights in the copper pit mine was approved by the Guangxi Department of Natural Resources with “recommendation approval”.

The change will expand the scope of the company's mining rights and add zinc ore as a mining species. The company did not capitalize any proceeds from mining rights concessions and included all current costs and expenses, reducing the net profit attributable to shareholders of listed companies by about 0.055 billion yuan for the period.

Continue to be optimistic about the rising price of tin and antimony. Tin: Overseas tin ore is increasingly scattered and there is great uncertainty. Semiconductors are expected to enter the active inventory replenishment stage, the global PV installation boom continues, and the tin supply and demand pattern continues to improve. Antimony: Inventories are still at a very low level. After the “new model” of exports is completed, external demand will return to normal levels; photovoltaic glass inventories are expected to reach an inflection point, and subsequent recovery in construction levels is expected to lead to a recovery in demand; and as a capital-intensive industry, photovoltaics is expected to benefit from interest rate cuts. We believe antimony prices are expected to rise again.

Profit Forecasts, Valuations, and Ratings

The company's revenue for 2024-2026 is estimated to be 4.9/5.9/6.9 billion yuan, net profit to mother is 0.82/1.27/1.54 billion yuan, EPS is 1.30/2.00/2.43 yuan, respectively, and the corresponding PE is 13.6/9.1/7.3 times, respectively. Maintain a “buy” rating.

Risk warning

The price of tin and antimony fluctuates; project progress falls short of expectations; risk of element substitution.