\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 899 Zijin Mining Group Company Limited(601899) )
Event: Zijin Mining Group Company Limited(601899) released the annual report of 2021. During the reporting period, the company achieved operating revenue of 225102 billion, a year-on-year increase of 31.25%, net profit attributable to parent company of 15.673 billion, a year-on-year increase of 140.80%, net profit not attributable to parent company of 14.681 billion, a year-on-year increase of 132.21%; In Q4 of 21 years, the operating revenue was 56.127 billion, a year-on-year increase of 36.67%, a month on month decrease of 5.05%, and the net profit attributable to the parent company was 4.37 billion, a year-on-year increase of 125.72% and a month on month decrease of 6.08%.
During the reporting period, the production of new M & A projects and technological transformation projects brought about increased production and efficiency, and the volume and price of main products rose together, driving the high growth of the company’s performance. The three world-class copper mines provide output increment: in May 21, the phase I 3.8 million T / a project of kamoa copper mine in the Democratic Republic of the Congo was completed and put into operation, with an annual output of 200000 tons of copper; In October of 21, the upper ore belt of PEGI copper gold mine in Serbia was officially put into operation, with an annual output of 91400 tons of copper and 2.5 tons of gold expected; In December, the first phase of Julong copper mine in Tibet was completed and put into operation, with an annual output of 160000 tons of copper.
1) copper business: the average price of LME copper in 21 years is 931749 US dollars / ton (YoY + 50.75%), and the average price of SHFE copper is 6840897 yuan / ton (YoY + 40.19%). The company’s annual mineral copper is 584200 tons (YoY + 28.83%), the sales volume is 567200 tons (YoY + 26.05%), the smelting copper production is 621300 tons (YoY + 7.94%), and the sales volume is 620700 tons (YoY + 7.70%).
2) gold business: in 21 years, the average price of Comex gold was 179899 US dollars / ounce (YoY + 1.10%), the average price of SHFE gold was 375.79 yuan / gram (yoy-3.53%), the average price of mineral gold was 47.46 tons (YoY + 17.16%), and the sales volume was 45.66 tons (YoY + 19.49%). The output of mineral gold did not meet the output target (target 53-56 tons) set by the company at the beginning of the 21st century. On the one hand, the output expectation of the company was not met because there was no clear information on the resumption of production in bogla gold mine. On the other hand, the logistics of technical transformation equipment was affected by epidemic and other factors, resulting in the technical transformation and other projects were less than expected.
3) zinc business: in 21 years, the average price of LME zinc is Guangdong Aofei Data Technology Co.Ltd(300738) US dollars / ton (YoY + 32.66%), the average price of SHFE zinc is 2236041 yuan / ton (YoY + 22.93%), the average price of mineral zinc is 396400 tons (YoY + 15.87%), the sales volume is 399300 tons (YoY + 14.86%), the smelting production of zinc is 322400 tons (YoY + 47.34%), and the sales volume is 322600 tons (YoY + 47.91%).
4) in other businesses, the output of mineral silver is 308.81 tons (YoY + 3.38%), and the output of iron concentrate is 4.25 million tons (YoY + 9.82%), excluding the output of iron concentrate of non holding enterprises is 3.3395 million tons (YoY + 9.20%).
The company’s expense rate decreased during the reporting period. The company’s expense rate during the 21 year period was 3.35%, a decrease of 0.52 PCTs compared with the same period last year. Specifically, 1) the sales expense rate decreased by 0.07 PCTs from 0.25% → 0.18%; 2) Due to the increase in employee compensation, enterprise annuity and share based payment costs in the current period, the administrative expenses increased by 37.29% year-on-year to 6.079 billion yuan, and the administrative expense rate increased by 0.12 PCTs from 2.58% to 2.70%; 3) In terms of financial expenses, due to the year-on-year decrease in exchange losses in the current period, the company’s financial expenses in 21 years totaled 1.496 billion yuan, a year-on-year decrease of 16.13%, and the financial expense rate decreased by 0.38pcts from 1.04% → 0.66%; 4) In terms of R & D expenses, in order to comprehensively improve the R & D and technological innovation level of mining technology, accelerate the technical capacity of the company’s new energy and new materials industry, and the transformation and upgrading of key mines and factories to automation, intelligence and informatization, the company set up R & D subsidiaries in Xiamen and Changsha to expand R & D investment. The R & D expenses increased by 32.30% to 771 million yuan year-on-year, and the R & D expense rate was flat at 0.34% year-on-year.
Copper, gold and other resource advantages rank first in China, and the foundation for sustainable development will be continuously consolidated in the future. The company has strong resource advantages. By the end of the 21st century, the company had 627705 million tons of copper resources (YoY + 1.15%) and 20.33 million tons of reserves, accounting for 75.25% of China’s total copper reserves; The gold resources are 237390 tons (YoY + 1.68%), and the reserves are 792 tons, accounting for 41.10% of China’s total gold reserves; Zinc ore resources are 9.6182 million tons (yoy-6.86%), with reserves of 4.55 million tons, accounting for 14.71% of China’s total copper reserves. The company’s copper, gold and zinc resources are in a leading position in the world, with strong resource advantages to ensure the foundation of sustainable development in the future.
Complete the M & A of 3q lithium salt lake project, layout the field of new energy materials and expand the incremental space. 1) In October 21, the company acquired 100% equity of new lithium company in cash and delivered it in January 22. It obtained Tres quebradas (hereinafter referred to as “3Q”) salt lake project located in Catamarca Province in northwest Argentina, with a new resource of 7.63 million tons of LCE and a reserve of 1.67 million tons of LCE. The first phase of the project is designed to produce 20000 tons of battery grade lithium carbonate per year, which is expected to be completed and put into operation by the end of 2023. By 2025, the company is expected to form an annual capacity of 50000 tons of lithium carbonate. 2) In November 21, the company set up a lithium yuan material company and planned to build a new lithium iron phosphate cathode material project with an annual output of 20000 tons. At present, the construction of the project has been started. 3) In November 21, the company established Zijin Copper Foil Technology to increase the construction and operation of the high-performance electrolytic copper foil project with an annual output of 20000 tons. 4) In addition to the establishment of new energy and Materials Research Institute, the ammonia hydrogen energy industrialization project in cooperation with Fuzhou University has been fully launched. The company will enter the field of new energy, increase the reserves of new energy mineral resources, and expand its investment in the field of new energy materials, which may effectively resist the risk of price rotation of different metals. At the same time, it may expand the incremental space in the future to become a “green high-tech super first-class international mining group”.
Profit forecast and investment suggestions: the progress of key copper and gold mine projects such as kamoa kakula, peji copper and gold mine in Serbia and Julong copper mine in Tibet, as well as the application of caving method in Serbian copper JM copper mine, Serbian gold lower belt mine, Tongshan Copper Mine in Heilongjiang and Luoling mine in Zijinshan, may bring large output increment to the company. In addition, the implementation of new energy and new materials projects may be accelerated one after another, and the growth logic will be gradually realized in the future. Based on the 2022 output guidelines and 2025 output plan disclosed in the company’s annual report, we expect the company’s mineral gold output to be 61.4/75.5/78.3 tons and mineral copper output to be 90.4/104.31116000 tons in 22-24 years. We raised the price of copper and gold on the assumption that the price of gold is 380 / 370 / 365 yuan / g and the price of copper is 6.5/6.565000 yuan / ton. It is estimated that the net profit attributable to the parent company in 22-24 years is 21.0/25.5/28.13 billion yuan respectively (it is estimated that it was 17.693/20.582 billion yuan respectively in the previous 22-23 years), and the corresponding PE in 21-23 years is 13.8/11.5/10.3x respectively. Maintain the company’s “buy” rating.
Risk warning: macroeconomic fluctuation exceeds the expected risk; Weak demand for copper and zinc and declining profits; Metal price fluctuation risk; The slow construction of projects under construction is less than expected, which affects the output of the company; Uncertainty risk of acquisition project, etc.
