\u3000\u3000 China Molybdenum Co.Ltd(603993) (603993)
Investment logic
Global leader in metal resources. The company is mainly engaged in mining, smelting and deep processing of copper and cobalt mines in the Democratic Republic of the Congo, tungsten and molybdenum mines in China, copper and gold mines in Australia and niobium and phosphorus mines in Brazil, as well as ixm basic metal trading business. 21. In the first half of the year, the revenue of mining business accounted for 14% and the gross profit accounted for 55%, of which the revenue of copper cobalt sector accounted for 51% and the gross profit accounted for 62%, contributing to the elasticity of main performance.
The copper price fluctuated at a high level in the short term, the demand improved in the medium and long term, and the performance elasticity of the company’s production expansion projects gradually appeared
On the demand side, the global demand for photovoltaic, new energy and wind power copper is expected to be 1.99 million tons in 22 years. On the supply side, in 22 years, the new capacity of major copper mines in the world was about 685000 tons. Global copper inventories continued to decline and are currently at a low level. The copper price has increased by nearly 80% from 5200 US dollars / ton at the beginning of 20 years to 9800 US dollars / ton now. It is expected to maintain a high shock trend in 22-23 years.
The 10K expansion project of the company is expected to increase production by 20000 tons in 21 years; The TFM mixed ore project is expected to be put into operation in 23 years, and the copper production capacity of the company will reach 450000 tons / year after reaching the production capacity, which is twice that of the current one. It is estimated that the copper sales volume of the company in 21-23 years will be 194500 tons, 220200 tons and 235600 tons respectively.
The demand for new energy metal cobalt and nickel continues to grow, and the company has become the global leader in cobalt
On the demand side, the battery field has a compound annual growth rate of 14%, and 5g drives the growth of electronic consumption. On the supply side, the output in 20 years decreased by 5% year-on-year, and the uncertainty of future epidemic situation is high. The cobalt price has increased by more than 30% after 20 years. At present, it is stable at more than 300000 / ton, and it is expected to remain high in 22-23 years.
The company has two high-quality copper cobalt mines, TFM and KFM, and the reserves of cobalt resources are the first in the world. It is estimated that the cobalt sales volume of the company in 21-23 years will be 14500 tons, 17000 tons and 19000 tons respectively. In terms of nickel, the 60000 ton hydrometallurgy project in Indonesia invested by the company and Zhejiang Huayou Cobalt Co.Ltd(603799) has been put into operation.
The metal trading business opens the stable growth attribute of the company. The company acquired ixm, a basic metal Trader, in July 19. The metal sales volume has continued to increase since 19 years. It is expected that the sales volume will increase by more than 30% year-on-year in 21 years. The company’s performance is less affected by metal price fluctuations and its growth attribute is enhanced.
Profit forecast & investment suggestions
It is estimated that the net profit attributable to the parent company in 21-23 years will be 5.692 billion yuan, 6.725 billion yuan and 7.731 billion yuan respectively, and the EPS will be 0.26 yuan, 0.31 yuan and 0.36 yuan respectively, corresponding to 23 times, 20 times and 17 times of PE respectively. The valuation adopts PE method, giving the company 20 times PE in 23 years, with a corresponding market value of 154.6 billion yuan and a target price of 7.2 yuan / share. It is given a “buy” rating for the first time.
Risk tips
Downstream demand is less than expected, metal price fluctuation risk, RMB exchange rate fluctuation risk, etc.
