Group 1 - Core viewpoint: China General Nuclear Power Corporation (CGN) Mining's stock dropped over 4% due to one-time factors affecting last year's net profit attributable to shareholders, while short-term momentum for uranium prices is lacking [1] - CGN Mining reported a revenue of approximately HKD 8.624 billion for 2024, representing a year-on-year increase of 17.18% [1] - The profit attributable to shareholders for the year was approximately HKD 342 million, a decrease of 31.2% year-on-year, primarily due to the accrual of dividend withholding tax and losses from the termination of Fission's operations [1] Group 2 - Citing a 15% future dividend withholding tax and recent declines in uranium prices, Zheshang International has lowered its price assumptions for 2025E/26E by 18%/16% to USD 75/83 per pound, with profit forecasts reduced by 28%/35% [2] - Despite the adjustments, the significant contract/spot price differential (USD 80/65 per pound in February) is expected to limit further declines in spot prices [2] - The company anticipates a decrease in relevant tax rates under Kazakhstan's new mineral resource tax mechanism set to take effect in 2026 [2]

Group 1 - The core viewpoint of the news is that CGN Mining (01164) experienced a decline of over 4% due to one-time factors affecting its net profit, while short-term momentum for uranium prices is lacking [1] - CGN Mining reported a revenue of approximately HKD 8.624 billion for 2024, representing a year-on-year increase of 17.18% [1] - The profit attributable to the company's owners for the year was approximately HKD 342 million, a decrease of 31.2% compared to the previous year, primarily due to the accrual of dividend withholding tax and losses from the termination of Fission's operations [1] Group 2 - Huatai Securities noted that while short-term momentum for natural uranium prices is lacking, the medium to long-term outlook remains positive due to supply-demand gaps that could drive uranium prices upward [1] - The current strong financial attributes of natural uranium spot prices may lead to a rapid decline in prices, influenced by minimal actual impacts from the US-Russia enrichment uranium ban and easing international conflict expectations following Trump's presidency [1] - Zhaoyin International has adjusted its price assumptions for 2025E/26E down by 18%/16% to USD 75/83 per pound, and lowered its earnings forecasts by 28%/35% [2]

Summary of CGN Mining Conference Call Company and Industry Overview - **Company**: CGN Mining - **Industry**: Uranium Mining and Nuclear Power Key Points and Arguments Financial Performance - In 2024, CGN Mining reported a significant increase in investment income, totaling HKD 1.016 billion, a 71% year-on-year growth, driven by a recovery in the uranium market and rising oil prices [2][3] - The company's revenue for 2024 was HKD 340 million, a 31% decline, while the profit before tax reached HKD 800 million, a 48% increase [4][15] - The gross profit margin decreased due to previously locked-in contract prices being lower than current market prices, leading to a negative impact on asset trading [16] Market Dynamics - The global nuclear power sector is experiencing positive growth, with multiple governments implementing supportive policies. The International Atomic Energy Agency has raised global nuclear power growth forecasts for four consecutive years [2][5] - By 2050, global nuclear power capacity is expected to reach 950 GW under high scenarios and 514 GW under baseline scenarios, which will steadily increase the demand for natural uranium [2][5] Uranium Supply and Demand - The natural uranium market is expected to face tight supply-demand dynamics in 2024, with uncertainties on the supply side, such as shortages in Kazakhstan and slow progress on new projects [2][6] - The long-term price of natural uranium is projected to maintain a stable upward trend, reaching USD 51 per pound by 2024 [2][6] Cost Management - CGN Mining has implemented measures to optimize procurement channels, enhance production efficiency, and strengthen supply chain management, keeping the average production cost at USD 24 per pound [2][7] - The company is actively pursuing diversified financing and cost control strategies to mitigate inflationary pressures [7] Future Development Plans - For 2025, CGN Mining plans to continue its dual-driven development model focusing on resource development and capital operations, with an emphasis on cost control and overseas uranium resource development [4][8] - The company proposes a stable dividend policy, suggesting a dividend of HKD 0.7 per share [4][9] Operational Insights - CGN Mining holds rights to four mining areas with a total resource of approximately 24,000 tons of uranium and an annual production capacity of about 1,300 tons [2][12] - The Zhalbak project is expected to complete its first phase of expansion by 2025, increasing capacity to 500 tons, with plans to reach 900 tons by 2030 [2][12] Challenges and Risks - The company faces challenges from global economic changes, trade protectionism, geopolitical risks, and supply chain fluctuations, which it addresses through optimized operational strategies [3] - Increased tax rates and regulatory changes in Kazakhstan have raised operational costs, impacting profit margins [17][45] Shareholder Engagement - CGN Mining emphasizes the importance of shareholder support and aims to maintain a stable dividend policy to reward investors [9][10] Strategic Partnerships - The company is exploring further collaboration opportunities with Paladin, particularly in the context of uranium resource development [46][47] Geopolitical Considerations - Global geopolitical changes are prompting CGN Mining to diversify its resource acquisition strategies beyond Kazakhstan to include other uranium-producing countries [49] Market Strategy - The company maintains a conservative market strategy focused on risk control while participating in the uranium market, ensuring a stable operational framework [41] Additional Important Insights - The long-term outlook for uranium prices is positive, supported by rising production costs and increasing demand for nuclear energy [48] - The company is closely monitoring the impact of AI and small modular reactors (SMRs) on the nuclear energy landscape, which may influence future resource acquisition strategies [39][50]

Financial Performance - The company's revenue for the year ended December 31, 2024, was HKD 8,624,272,000, representing a 17.2% increase from HKD 7,359,952,000 in 2023[3] - The gross loss for the year was HKD 66,120,000, compared to a gross profit of HKD 128,755,000 in the previous year[3] - The profit before tax increased to HKD 814,211,000, up from HKD 548,972,000 in 2023, marking a 48.4% increase[3] - The net profit attributable to the owners of the company was HKD 341,981,000, down from HKD 497,099,000 in 2023, reflecting a decrease of 31.2%[4] - Basic earnings per share from continuing operations increased to HKD 0.0693, compared to HKD 0.0640 in the previous year[4] - The income tax expense for 2024 was HKD 287,485,000, significantly higher than HKD 62,369,000 in 2023, indicating increased tax liabilities[36] - The company reported a profit of HKD 341,981,000 for 2024, a decrease of 31.2% compared to HKD 497,099,000 in 2023[49] Assets and Liabilities - Total assets as of December 31, 2024, amounted to HKD 7,842,287,000, an increase from HKD 6,750,363,000 in 2023[5] - Current liabilities increased significantly to HKD 3,732,188,000 from HKD 1,391,228,000 in 2023, indicating a rise of 168.5%[5] - The total liabilities rose to HKD 3,920,581,000 in 2024 from HKD 2,870,172,000 in 2023, primarily driven by the natural uranium trading segment[24] - The company's equity increased slightly to HKD 3,921,706,000 from HKD 3,880,191,000 in 2023[6] - The total current liabilities rose by 168% to HKD 3,732 million as of December 31, 2024, compared to HKD 1,391 million as of December 31, 2023, mainly due to increased bank borrowings and reclassification of long-term loans from a subsidiary to short-term loans[147] Revenue Sources - Revenue from continuing operations for 2024 reached HKD 8,624,272,000, a 17.1% increase from HKD 7,359,952,000 in 2023[33] - The group reported a significant increase in revenue from external customers in mainland China, reaching HKD 1,987,964,000 in 2024, up 17.8% from HKD 1,687,603,000 in 2023[31] - The group’s revenue from the Hong Kong Special Administrative Region surged to HKD 2,386,244,000 in 2024, compared to HKD 385,815,000 in 2023, marking a substantial increase[31] - The total trading volume of natural uranium reached HKD 8,624 million, a 17% increase from 2023, with sales from the Xie and Ao companies amounting to HKD 1,957 million, up 16%[97] Operational Highlights - The segment loss for the natural uranium trading division was HKD (94,598,000), while the other investment segment reported a profit of HKD 1,016,278,000, leading to a total segment profit of HKD 921,680,000[22] - The company achieved a uranium production of 976tU in 2024, completing its annual plan at 100.1%, with production costs of $32/lbU3O8 for the Xie mine and $24/lbU3O8 for the Yi mine[90] - The company produced 1,783tU in the second half of 2024, exceeding its annual plan by 1.9%, with production costs of $22/lbU3O8 for the Zhong mine and $31/lbU3O8 for the Zha mine[93] Market and Industry Trends - The global nuclear power market is projected to see an increase in installed capacity to 950 GWe by 2050 under high-case scenarios, up 7% from previous forecasts[76] - The global natural uranium production in 2024 is estimated at 58,846 tU, an 8.2% increase from 2023, with major producers like Kazatomprom and Cameco contributing significantly[86] - The long-term contract price for uranium increased from $72/lbU3O8 in January to $81/lbU3O8 in November 2024, reflecting ongoing demand despite a decrease in trading volume[86] Corporate Governance and Strategy - The company is focused on maintaining a strong governance structure with a diverse board composition[174] - The company plans to continue focusing on cost control measures and market risk management to ensure stable operations amid fluctuating market conditions[97] - The implementation of stock incentive policies is aimed at enhancing the sense of belonging and loyalty among management and core employees[114] Dividends and Shareholder Information - The company declared an interim dividend of HKD 0.3 per share, totaling approximately HKD 22,802,000 for the year ending December 31, 2024[48] - The board of directors proposed a final cash dividend of HK$0.007 per share for the year ending December 31, 2024, compared to no dividend for 2023[160] - An interim cash dividend of HK$0.003 per share was declared and paid for the six months ending June 30, 2024, while there was no interim dividend for the same period in 2023[160] Future Outlook - The company is actively enhancing its resource base through exploration and development projects, including drilling activities to increase recoverable resources[94] - The company aims to actively explore new business models and trade opportunities while maintaining strict control over operational risks[112] - The company will closely monitor international geopolitical developments and their impact on capital market performance and resource development[117]

Investment Rating - The investment rating for China General Nuclear Power Corporation (1164 HK) is maintained as "Buy" with a target price of HKD 2.00 [7][8]. Core Views - The company has issued a profit warning, expecting a net profit of HKD 317 to 367 million for 2024, representing a year-on-year decline of 26% to 35%. This is primarily due to the accrual of dividend withholding tax and losses from the termination of operations related to the Fission acquisition. However, the tax-adjusted operating profit is expected to grow by 41% to 50%, reaching HKD 790 to 840 million, driven by rising uranium prices [1][2]. - The report expresses optimism regarding the recovery of uranium prices, supported by policies promoting nuclear energy in the US and Europe, which are expected to create a supply-demand gap that will drive prices upward in the medium to long term [1][3]. Summary by Sections Earnings Forecast and Valuation - The earnings per share (EPS) forecast for 2024 has been revised down by 35% to HKD 0.05 per share, while the EPS for 2025 and 2026 remains at HKD 0.10 and HKD 0.14 respectively. The target price is set at HKD 2.00, based on a price-to-earnings (PE) ratio of 20x for 2025 [4][12]. Revenue and Profitability - The projected revenue for 2024 is HKD 9,919 million, with a year-on-year growth of 34.72%. The net profit attributable to the parent company is expected to be HKD 364.07 million, reflecting a decrease of 26.76% compared to 2023. The company anticipates a recovery in profitability with a projected net profit of HKD 764.89 million in 2025 [6][17]. Uranium Market Outlook - The spot price of uranium is expected to stabilize, having dropped from USD 76 to USD 65 per pound, while long-term contract prices have increased to USD 81 per pound, indicating ongoing supply-demand tensions in the industry. Key drivers for future uranium demand include regulatory changes in the US and potential shifts in Germany's nuclear policy [3][4].

Investment Rating - The report maintains a BUY rating for CGN Mining with a target price of HK$2.36, indicating a potential upside of 55.5% from the current price of HK$1.52 [3]. Core Insights - CGN Mining's profit alert indicates a net profit drop of HK$130-180 million year-on-year for 2024, primarily due to a one-off dividend withholding tax and a fair value loss from share swaps related to Paladin Energy. However, excluding these items, the pretax profit from continuing operations is expected to grow by HK$230-280 million year-on-year, translating to a growth rate of 41-50% [1]. - The company is set to release its full-year results on March 20, 2025, and will host an analyst meeting on March 21, 2025 [1][6]. Financial Summary - Revenue is projected to grow from HK$7,363 million in FY23 to HK$10,992 million in FY24, reflecting a year-on-year growth of 49.3% [2]. - Adjusted net profit is expected to decline from HK$497.1 million in FY23 to HK$443.4 million in FY24, a decrease of 10.8% [2]. - The earnings per share (EPS) is forecasted to decrease from 6.54 HK$ cents in FY23 to 5.83 HK$ cents in FY24 [2]. - The price-to-earnings (P/E) ratio is projected to be 26.1x in FY24, decreasing to 17.1x in FY25 [2]. - The return on equity (ROE) is expected to decline from 13.8% in FY23 to 10.8% in FY24, before recovering to 14.6% in FY25 [2]. Share Performance - The market capitalization of CGN Mining is approximately HK$11,553 million, with an average turnover of HK$72.3 million over the past three months [3]. - The stock has experienced a 1-month decline of 2.6% and a 3-month decline of 7.9% [5]. Shareholding Structure - The major shareholder is China General Nuclear Power Corporation, holding 56.9% of the shares, followed by China Chengtong Holding Group with 10.0% [4].

Investment Rating - The report maintains a "Buy" rating for China General Nuclear Power Group (1164 HK) with a target price of HKD 2.36, representing a potential upside of 55.5% from the current price of HKD 1.52 [4][5][25] Core Insights - The profit warning issued by China General Nuclear Power Group indicates a projected net profit decline of HKD 130-180 million for 2024, primarily due to one-off items such as dividend withholding tax and fair value changes from stock exchanges [1][2] - Excluding these one-off factors, the pre-tax profit from ongoing operations is expected to grow by HKD 230-280 million in 2024, reflecting a year-on-year increase of 41-50%, slightly above previous forecasts [1][2] - The company reported a significant increase in income tax expenses for the first half of 2024, attributed to changes in Kazakhstan's tax policy regarding dividend withholding tax [1] Financial Summary - Revenue is projected to grow from HKD 7,363 million in FY23A to HKD 10,992 million in FY24E, representing a year-on-year growth rate of 49.3% [3][12] - Adjusted net profit is expected to decline from HKD 497.1 million in FY23A to HKD 443.4 million in FY24E, a decrease of 10.8% [3][12] - The company’s earnings per share (adjusted) is forecasted to decrease from HKD 6.54 in FY23A to HKD 5.83 in FY24E [3][12] Shareholder Structure - China General Nuclear Power Group holds a 56.9% stake in the company, with China Chengtong Holdings holding 10.0% [5] Stock Performance - The stock has experienced a decline of 2.6% over the past month and 7.9% over the past three months [6]

Investment Rating - The report initiates coverage with a "Buy" rating for the company, setting a target price of HKD 2.36 based on a 3x net present value (NPV) calculation [2][4]. Core Insights - The company is expected to benefit from a structural growth trend in nuclear power, leading to increased demand for natural uranium over the next decade. This is coupled with limited uranium supply, which is anticipated to keep uranium prices elevated in the coming years [2]. - The average uranium price is projected to rise to USD 85 per pound in 2024, representing a year-on-year increase of over 30%, with further annual increases of 8% expected in 2025 and 2026 [2]. - The company's net profit is forecasted to double by 2026 compared to 2023, despite a projected decline in net profit for 2024 due to increased tax expenses [4]. Summary by Sections Company Overview - The company holds stakes in four low-cost uranium mines located in Kazakhstan through joint ventures with Kazatomprom (KAP). The average mining cost for these mines ranges from USD 17 to 27 per pound, which is considered low on a global scale [3]. Financial Projections - For 2023, the company's net profit is expected to decline by 11% to HKD 440 million, primarily due to a significant increase in tax expenses. However, net profits are projected to rebound with increases of 52% and 63% in 2025 and 2026, respectively [4]. - The sensitivity analysis indicates that a 1% increase in uranium spot prices could lead to a 0.7% increase in net profit for the company [4]. Cost and Tax Considerations - The report notes an increase in Kazakhstan's mineral extraction tax (MET), which will rise from 6% in 2024 to 9% in 2025. However, the overall impact of the new tax regime is expected to be manageable due to the relatively small scale of the mines [3]. - Anticipated increases in production costs are projected at 12% and 9% for 2025 and 2026, respectively, due to tight sulfuric acid supply [3].

Investment Rating - The report initiates coverage on China General Nuclear Power Corporation Mining (1164 HK) with a "Buy" rating and a target price of HKD 2.36, reflecting a potential upside of 32.0% from the current price of HKD 1.79 [3][15]. Core Views - The report anticipates a structural growth in nuclear power demand over the next decade, which will benefit natural uranium prices, projected to remain high due to limited supply [1]. - The company holds stakes in four low-cost uranium mines in Kazakhstan through joint ventures with Kazatomprom, positioning it well to capitalize on rising uranium prices [1]. - The average uranium price is expected to rise to USD 85 per pound in 2024, a year-on-year increase of over 30%, with further annual increases of 8% in 2025 and 2026 [1][7]. Financial Projections - The report forecasts a net profit of HKD 4.4 billion for 2024, a decline of 11% year-on-year, primarily due to increased tax expenses [1][7]. - Net profits are expected to rebound in 2025 and 2026, with projected increases of 52% and 63%, respectively [1][7]. - The sensitivity analysis indicates that a 1% increase in uranium spot prices could lead to a 0.7% increase in net profit for the company [1][7]. Operational Insights - The company’s main profit sources are the joint ventures with Semizbay-U and Ortalyk, which are expected to contribute net profits of HKD 9.5 billion, HKD 10 billion, and HKD 11 billion for 2024, 2025, and 2026, respectively [7]. - The average production costs for the mines are projected to rise by 12% and 9% in 2025 and 2026, respectively, due to tight supply of sulfuric acid [1][7]. Valuation Methodology - The target price is based on a net present value (NPV) calculation, reflecting future cash flows discounted to present value, with a multiple of 3x NPV applied [1][15]. - Long-term assumptions include uranium prices starting at USD 101 per pound from 2027, increasing by 1.5% annually, and a stable price of USD 107 per pound from 2032 to 2042 [15].

Investment Rating - The report maintains a "Buy" rating for China General Nuclear Power Corporation (1164.HK) with a target price of HKD 2.25 [1][4]. Core Views - The third quarter operational performance met expectations, with a uranium production of 692.6 tons, achieving a completion rate of 97.2%. The report anticipates increased demand for natural uranium due to renewed focus on nuclear power in both China and the U.S. [1][2]. - The report forecasts net profits for the years 2024 to 2026 to be HKD 420.8 million, HKD 849.2 million, and HKD 1 billion respectively, with corresponding EPS of HKD 0.055, HKD 0.112, and HKD 0.137 [2][3]. Summary by Sections Production and Sales Performance - In Q3 2024, the company achieved a uranium production of 692.6 tons, with individual mines showing completion rates of 99.4% and 101.6% for specific operations [2]. - New procurement orders signed in Q3 totaled 1,179 tons, a year-on-year decrease of 47.1% but a quarter-on-quarter increase of 14.9%. The sales orders were 1,288 tons, reflecting a year-on-year decrease of 43.2% but a quarter-on-quarter increase of 44.9% [2]. Financial Performance - The report projects sales revenue to grow from HKD 3.65 billion in FY2022 to HKD 11.92 billion in FY2026, with a growth rate of 101.8% in FY2023 [3]. - The net profit is expected to decline slightly in FY2024 to HKD 420.8 million, before increasing significantly in the following years [3]. Valuation Metrics - The report provides a PE ratio forecast of 32.51 for FY2024, decreasing to 13.09 by FY2026, indicating an improving valuation as earnings grow [3]. - The projected PB ratio is expected to decline from 32.4 in FY2024 to 2.39 in FY2026, suggesting a more favorable valuation over time [3].