\u3000\u3000 Zijin Mining Group Company Limited(601899) (601899)
Event: on January 17, 2022, the company announced the announcement of performance increase in 2021. In 2021, the company expects to realize a net profit attributable to the parent company of about 15.6 billion yuan, with a year-on-year increase of about 9.091 billion yuan and a year-on-year increase of about 139.67%; It is expected to realize a net profit of about 14.5 billion yuan, a year-on-year increase of 8.178 billion yuan and a year-on-year increase of about 129.36%. Quarterly, in 2021q4, the company expects to realize a net profit attributable to the parent company of about 4.298 billion yuan, a year-on-year increase of 122.0% and a month on month decrease of 7.6%; It is expected to realize a net profit of RMB 4.011 billion, a year-on-year increase of 142.2% and a month on month decrease of 8.4%. The performance exceeded wind’s consensus expectations and was slightly lower than our expectations.
The year-on-year increase in performance in 2021 is mainly due to the simultaneous increase in the volume and price of mineral copper, silver, zinc (lead) and iron concentrate and the year-on-year increase in mineral gold output. In 2021, the prices of copper, silver, lead, zinc and iron concentrates increased by 40.19%, 11.21%, 4.34%, 22.93% and 47.96% year-on-year respectively. The output of copper, gold, silver, zinc (lead) and iron concentrates of the company increased by 28.92%, 17.28%, 3.34%, 14.81% and 9.71% year-on-year respectively. In 2021, the company’s gold output was 47.5 tons, which only reached 85% – 90% of the planned value (53-56 tons) in 2021, which was lower than expected, or the output was lower than expected due to the lower than expected re production of Guyana gold field, mainland gold and poguerra, which was the main reason why the performance was lower than our expectation. In addition, the sales of kamoa copper mine was affected by the epidemic and logistics, and the company’s consolidated statements did not fully reflect the output and profit of kamoa copper mine.
The company announced the production guidelines for 2022, reduced the output of mineral gold and increased the output of mineral copper. The company’s production plan for 2022 is: 60 tons of mineral gold, 860000 tons of mineral copper, 480000 tons of mineral zinc (lead), 310 tons of mineral silver and 3.2 million tons of iron concentrate. Compared with this year, the output of copper and gold has increased significantly year-on-year. Compared with the production plan formulated in January 2021, the lower limit of mineral gold is reduced by 7 tons compared with the original plan of 67-74 tons, and the upper limit of mineral copper is increased by 10000 tons compared with the original plan of 800000-850000 tons. Other products meet the previous planning scope. The reduction of mineral gold production was mainly dragged down by the less than expected construction progress of Guyana gold field and mainland gold, and the slow resumption of production of poguerra gold mine; The increase in mineral copper production is mainly due to the scheduled production of three world-class copper mines (Timok, kakura, kamoa and Julong) and the contribution of higher than expected output.
In 2022, several projects of the company will contribute to the output increment. In the copper sector, the three world-class copper mines will contribute a large increment in 2022. According to our calculation, under the assumption of copper price (including tax) of 65000 yuan / ton, kamoa kakula, Timok and Julong copper mines may contribute net profit attributable to the parent company of 2.53 billion yuan, 7.47 billion yuan and 1.65 billion yuan respectively in 2022. In the gold sector, multi project technical transformation is expected to increase the annual output of gold by 12 tons and complete the annual capacity planning. In addition, the company acquired lithium salt lake to enter the field of new energy metals and expects the project to be put into operation.
Profit forecast and investment suggestions: the company is ushering in a new era of performance. The output guidance of the main product copper, gold, zinc and lead in 2022 has greatly improved compared with this year’s output. The superimposed copper and gold price is expected to remain high. We continue to be optimistic about the fulfillment of the company’s alpha logic. Due to the lower expectation of gold production, we adjusted the profit forecast of the company. It is expected that the company will realize net profit attributable to the parent company of 15.6 billion yuan, 25.4 billion yuan and 26.8 billion yuan from 2021 to 2023. The PE corresponding to the closing price on January 17 is 16x, 10x and 9x, maintaining the “recommended” rating.
Risk tip: the project progress is less than expected, the price of copper and gold falls, geopolitical risks, etc.
