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社区
会员
机构：中金公司
研究员：Zheng WANG/Ding QI/Yan CHEN
JCHX Mining Management announced its 2023 results: Revenue rose 38.18% YoY to Rmb7,399mn, net profit attributable to shareholders grew 69.12% YoY to Rmb1,031mn, and recurring net profit rose 67.83% YoY to Rmb1,028mn. In 1Q24, the firm’s revenue rose 33.68% YoY to Rmb1,973mn, and net profit attributable to shareholders grew 48.07% YoY to Rmb274mn. The firm’s 2023 and 1Q24 earnings are in line with our expectations. Thanks to coordinated development of its mining service and resource businesses, the firm’s earnings grew rapidly.
Trends to watch
A leading provider of integrated mine operation services; substantial progress in “mining services plus resources” strategy. Mining services business segment: The firm has established a strong reputation in overseas markets thanks to its technological expertise and extensive experience in mining development services. The firm is expanding its presence in both domestic and overseas markets. In 2023, the proportion of the firm’s overseas mining service business reached 63%. We believe the firm’s efforts to expand its presence in domestic and overseas markets could drive steady improvement in its earnings from mining services.
Resources business segment: By acquiring high-quality mine resource projects, the firm has established a dual-driver (mining development services and resource development) growth model, driving the firm’s comprehensive transformation from a mining development service provider into a mining group company. In 2023, the firm put the southern mining area of the Liangchahe phosphate mine in China and the Lonshi copper mine in the Democratic Republic of the Congo into operation, and its resource business segment generated revenue of Rmb626mn, accounting for 8.46% of the total. We think the firm has made substantial progress in its “mining services plus resources” strategy, and we look forward to the long-term growth of its resources business segment.
Growth of copper mine production to accelerate; resources business segment to become a new growth engine. The firm controls or holds stakes in four mines and it plans to acquire another copper mine. First, the Lonshi copper mine in the Democratic Republic of Congo has been put into operation in 2023, and it has a 40,000t/year designed production capacity for copper metal. The firm expects the copper mine to reach full capacity by end-2024 and produce 20,000t of copper metal in 2024. Second, the Dikulushi copper mine in the Democratic Republic of the Congo has been put into operation in 2022, and the firm expects the copper mine to produce copper concentrates containing about 10,000t (equivalent) of copper in 2024. Third, the first phase of the domestic Liangchahe phosphate mine project (300,000t/year) has been put into operation in mid-2023, and the firm plans to put the second phase of the project (500,000t/year) into operation in 2025. The firm plans to produce 300,000t of phosphate ores in 2024. Fourth, the firm holds a stake in Cordoba Minerals (acquiring a 59.99% stake in a project) in Colombia, and the firm has submitted an environmental impact assessment report for government assessment, planning to produce about 30,000t of copper metal and about 2t of gold per year. Fifth, the firm plans to acquire the Lubambe copper mine in Zambia, and it plans to upgrade technologies for the mine and expects the mine to achieve annual copper production of about 32,500t by 2027. We believe the firm’s earnings growth will accelerate thanks to its “mining services plus resources” strategy.
Financials and valuation
We leave our 2024 and 2025 earnings forecasts largely unchanged. The stock is trading at 17x 2024e and 15x 2025e P/E. We maintain OUTPERFORM rating. Given the uptrend in the nonferrous metals industry and the strong growth potential of the firm’s production capacity, we raise our TP by 31% to Rmb63 (20x 2024e and 18x 2025e P/E), offering 20% upside.
Risks
Sharp fluctuations in product prices; disappointing capacity expansion; political risks in countries where overseas projects are located.