\u3000\u3 Shengda Resources Co.Ltd(000603) 993 China Molybdenum Co.Ltd(603993) )
Events
The company released the first quarterly report of 22 years on April 28. In Q1, the company’s revenue was 44.525 billion yuan, a year-on-year increase of + 11.55%; The net profit attributable to the parent company was 1.792 billion yuan, a year-on-year increase of + 77.88%.
Commentary
The volume and price of main products rise together to contribute to the profit increment.
Volume: 1) Congo (DRC): TFM copper / cobalt output was 6.24/0.51 million tons, a year-on-year increase of + 26% / + 55%; Since September last year, the output of cobalt mine has increased significantly. 2) Brazil: the output of niobium / phosphorus was 24 / 276500 tons, with a year-on-year increase of + 29% / + 8%. Since the Brazilian sector achieved Chinese control in 21 years, through the implementation of a series of management measures such as cost reduction and efficiency increase, the output and profit of the Brazilian sector have increased significantly; 3) China: the output of molybdenum / tungsten is 38 / 1900 tons, with a year-on-year increase of – 5% / – 7%. 4) Australia: NPM copper / gold output was 5200 tons / 0.38 ounces, a year-on-year increase of – 8% / – 16%; 5) Trade: ixm expanded its trade platform through term combination, and Q1 achieved a trade volume of 1.485 million tons, a year-on-year increase of + 6%.
Price: 22q1mb cobalt price: USD 36 / lb, year-on-year + 67%; LME copper price was USD 10000 / ton, a year-on-year increase of + 18%. Copper and cobalt prices are expected to remain at a high level throughout the year, supporting the company’s performance.
Sino Vietnam nickel cobalt has become a new profit growth point. Q1 company’s investment income in associates and joint ventures was 105 million yuan, which increased significantly year-on-year and month on month, mainly benefiting from the profit contributed by Huayue nickel cobalt. Huayue project was put into trial production at the end of the 21st century. By the end of the first quarter, all four sets of units had been put into operation. It is expected to reach production by the end of June. There is still room for further improvement in output and profit level after reaching production. The company indirectly holds 30% equity of Huayue nickel cobalt. Under the high nickel price, Huayue project will continue to form a beneficial supplement to the company’s profits.
TFM & KFM project is advancing as scheduled. TFM copper cobalt mixed ore project is expected to be completed and put into operation as scheduled in 23 years, with a new copper production capacity of 200000 tons + cobalt production capacity of 17000 tons, double the current level; The preliminary work of KFM project has been steadily promoted, and all milestone nodes have been completed on time. After the new project is put into operation, the scale effect will be further enhanced, and the volume increase + profit increase will bring strong medium-term performance growth.
Investment advice
It is estimated that the net profit attributable to the parent company in 22-24 years will be RMB 6.69979779903 billion respectively, the corresponding EPS will be RMB 0.31/0.37/0.46 respectively, and the corresponding PE will be 14 / 12 / 10 times respectively, maintaining the “buy” rating.
Risk tips
The project is not put into operation as expected; Metal prices are lower than expected; RMB exchange rate fluctuation risk, etc
