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会员
机构：中金公司
研究员：Ding QI/Manwen HE/Yan CHEN
Yunnan Tin announced its 2023 results: Revenue declined 18.5% YoY to Rmb42.4bn in 2023, and net profit attributable to shareholders grew 4.6% YoY to Rmb1.41bn. In 4Q23, revenue fell 11.5% YoY and 19.6% QoQ to Rmb8.7bn, and net profit attributable to shareholders rose Rmb312mn YoY but fell 23.2% QoQ to Rmb313mn. The results missed our expectations due to falling tin and zinc prices.
Falling sales volume and prices of tin products weighed on operating results; sharp decline in asset impairment losses in 2023 supported a YoY recovery in overall earnings. Prices: According to iFinD, the average prices of tin, zinc and copper in China changed -13%, -14% and +2% YoY to Rmb212,406, Rmb21,505 and Rmb68,041/t in 2023. Volume: According to the firm's announcement, its output of tin, zinc, and copper raw ore metals was 31,958t, 122,631t and 30,625t in 2023, changing -7%, +17% and -3% YoY. Asset impairment: According to the firm's announcement, its provisions for asset impairment losses in 2023 reduced Rmb1bn compared to in 2022.
Operating quality improving; dividend payout ratio growing. The firm's capital structure continued to improve in 2023. Its cost of funds declined and returns to investors improved. According to the firm's announcement, its liability-to-asset ratio fell 3.6ppt YoY in 2023. The firm’s average borrowing rate fell 0.5ppt YoY according to our estimates, and the cash dividend ratio rose 15.7ppt YoY.
Trends to watch
Ample tin and indium resources lay a solid foundation for the firm's leading position in both tin and indium industries; aiming to increase output of tin and copper in 2024. According to the firm’s announcement, Yunnan Tin has ranked No.1 in the world in terms of output and sales volume of tin since 2005, and its share of the domestic and global tin market was 47.92% and 22.92% in 2023, up 0.14ppt and 0.38ppt YoY. Second, the firm has the largest reserves of indium resources in the world and the largest production base of primary indium in China. Third, Yunnan Tin plans to produce around 85,000t, 131,600t and 130,000t of tin, zinc and copper products in 2024, changing +6%, -2% and +0.5% YoY.
Improving supply and demand conditions in the tin industry may push up average tin prices in the medium and long term; we are upbeat on the firm's profit growth driven by rising tin prices. We believe the rapid growth of the PV industry, the continued development of AI large models, and the recovery in the semiconductor industry will boost tin demand, and improving supply and demand conditions will drive up average tin prices amid supply disruptions in Myanmar and Indonesia. According to the firm's announcement, tin products are its largest source of profit, which accounted for 41.5% of its gross profit in 2023. We are upbeat on the firm's profit growth driven by rising tin prices.
Financials and valuation
We keep our 2024 earnings forecast unchanged and introduce our 2025 net profit forecast of Rmb2.36bn. The stock is trading at 13x 2024e and 12.2x 2025e P/E. We maintain our OUTPERFORM rating. Considering that tight supply and demand conditions in the tin industry may lift average tin prices in the medium and long term and the nonferrous metal industry is undergoing a sector-wide re-rating, driving up the firm's valuation, we raise our target price 23% to Rmb21.5, implying 16x 2024e and 15x 2025e P/E, and offering 22.9% upside.
Risks
Semiconductor demand disappoints; overseas tin supply beats expectation.