Core Viewpoint - Chihong Zn & Ge Co., Ltd. has experienced fluctuations in stock price and trading volume, with a notable decline of 2.12% on September 3, 2023, and a total market capitalization of 30.293 billion yuan [1][2]. Company Overview - Chihong Zn & Ge Co., Ltd. is located in Qujing City, Yunnan Province, and was established on July 18, 2000, with its stock listed on April 20, 2004. The company specializes in the mining, smelting, deep processing, and sales of lead, zinc, and germanium products [2]. - The revenue composition of the company includes zinc products (60.71%), lead products (13.08%), silver products (11.51%), and other categories (15.71%) [2]. Financial Performance - For the first half of 2025, Chihong Zn & Ge reported operating revenue of 10.581 billion yuan, representing a year-on-year growth of 7.67%. The net profit attributable to shareholders was 932 million yuan, reflecting a year-on-year increase of 3.27% [2]. - The company has distributed a total of 7.344 billion yuan in dividends since its A-share listing, with 1.981 billion yuan distributed over the past three years [3]. Shareholder Structure - As of June 30, 2025, the number of shareholders for Chihong Zn & Ge was 169,500, a decrease of 1.26% from the previous period. The average circulating shares per person increased by 1.28% to 30,035 shares [2]. - The top ten circulating shareholders include Hong Kong Central Clearing Limited, which holds 88.936 million shares, and Southern CSI 500 ETF, holding 45.327 million shares, both showing increases in shareholding compared to the previous period [3].

Summary of Chihong Zn & Ge Co., Ltd. Conference Call Company Overview - Chihong Zn & Ge reported a revenue of 10.58 billion yuan for the first half of 2025, a year-on-year increase of 7.67% [1] - Net profit attributable to shareholders was 932 million yuan, up 3.27% year-on-year [1] - Operating cash flow reached 2.158 billion yuan, reflecting a significant increase of 34.73% [1] - The company's debt-to-asset ratio decreased to 26.44%, positioning it among the leaders in the non-ferrous metal industry [1] Production Capacity and Mining Operations - The company operates six active mines with a total lead-zinc metal production capacity of 420,000 tons per year and smelting capacity of 630,000 tons per year [2] - The lead-zinc resource reserves exceed 32 million tons [2] - The company plans to increase zinc alloy production capacity to 220,000 tons per year starting from the end of 2024 [2] - The company has invested in technological upgrades, increasing the smelting capacity in Hohhot to 300,000 tons [1][4] Financial Performance - The company achieved a mining recovery rate improvement, with smelting costs for new products decreasing by 27.85% year-on-year [1][10] - Four smelting enterprises under the company reported profitability in the first half of 2025 [10] - The company implemented a dividend of 657 million yuan for 2024 and announced a mid-year dividend plan for 2025, distributing 0.3 yuan per share [1][15] Strategic Initiatives - Chihong Zn & Ge is focusing on digital and green transformation, investing 281 million yuan in safety and environmental protection [1][14] - The company has established a joint venture with Chalco and others to create a high-value rare metal industry chain platform [4][33] - The company is committed to high shareholder returns, with a total dividend payout ratio of 68.19% [15] Technological and Environmental Innovations - The company has developed a comprehensive resource utilization and technological innovation strategy, focusing on clean production and recycling [5] - The ESG report has been rated A for four consecutive years, reflecting the company's commitment to environmental, social, and governance standards [14] Future Outlook and Expansion Plans - The company does not plan to build new smelting facilities but will enhance existing production processes based on market demand [16] - The focus will be on increasing the production ratio of zinc alloys, which contribute higher profits compared to traditional zinc products [17] - The company aims to optimize its mining operations and enhance production efficiency through smart mining initiatives [32] Challenges and Market Conditions - The company faced a decline in new product output due to maintenance activities, with a 6.98% year-on-year decrease in emerging product production [10] - Mining costs have slightly increased due to project construction and reduced high-grade ore production [26] Share Buyback and Market Management - In July 2025, the company completed a share buyback of 5.091 million shares, representing 1% of total shares [3][27] - The company has a dividend policy aiming for an average payout ratio of no less than 40% over the next three years [28] Conclusion Chihong Zn & Ge Co., Ltd. is positioned for steady growth with a focus on operational efficiency, shareholder returns, and sustainable practices. The company is leveraging technological advancements and strategic partnerships to enhance its market position in the non-ferrous metal industry.

Quantitative Models and Construction Methods - **Model Name**: GAN_GRU **Model Construction Idea**: The GAN_GRU model combines Generative Adversarial Networks (GAN) for processing volume-price time-series features and Gated Recurrent Unit (GRU) for encoding time-series features to create a stock selection factor[4][13][41] **Model Construction Process**: 1. **GRU Component**: - Input features include 18 volume-price features such as closing price, opening price, turnover, and turnover rate[14][17][19] - Training data consists of the past 400 days of these features, sampled every 5 trading days, forming a 40x18 matrix to predict cumulative returns over the next 20 trading days[18] - Data preprocessing includes outlier removal and normalization at both time-series and cross-sectional levels[18] - Model architecture: Two GRU layers (128, 128) followed by an MLP (256, 64, 64), with the final output being the predicted return (pRet), which serves as the stock selection factor[22] - Training method: Semi-annual rolling training, with training conducted on June 30 and December 31 each year[18] - Optimization: Adam optimizer, learning rate of 1e-4, IC loss function, early stopping after 10 epochs, and a maximum of 50 training epochs[18] 2. **GAN Component**: - GAN consists of a generator (G) and a discriminator (D)[23] - Generator: Uses LSTM to preserve the time-series nature of the input features, transforming random noise into realistic data samples[33][37] - Loss function: $$ L_{G} = -\mathbb{E}_{z\sim P_{z}(z)}[\log(D(G(z)))] $$ where \( z \) represents random noise, \( G(z) \) is the generated data, and \( D(G(z)) \) is the discriminator's output probability[24][25] - Discriminator: Uses CNN to process the two-dimensional volume-price time-series features, distinguishing between real and generated data[33][37] - Loss function: $$ L_{D} = -\mathbb{E}_{x\sim P_{data}(x)}[\log D(x)] - \mathbb{E}_{z\sim P_{z}(z)}[\log(1-D(G(z)))] $$ where \( x \) is real data, \( D(x) \) is the discriminator's output for real data, and \( D(G(z)) \) is the output for generated data[27][29] - Training: Alternating updates of the generator and discriminator parameters until convergence[30] **Model Evaluation**: The GAN_GRU model effectively captures both time-series and cross-sectional features, leveraging the strengths of GAN and GRU for stock selection[4][13][41] --- Model Backtesting Results - **GAN_GRU Model**: - **IC Mean**: 11.36%[41][42] - **ICIR (Non-Annualized)**: 0.88[42] - **Turnover Rate**: 0.83[42] - **Recent IC**: -2.56%[41][42] - **1-Year IC Mean**: 8.94%[41][42] - **Annualized Return**: 38.09%[42] - **Annualized Volatility**: 23.68%[42] - **IR**: 1.61[42] - **Maximum Drawdown**: 27.29%[42] - **Annualized Excess Return**: 23.52%[41][42] --- Quantitative Factors and Construction Methods - **Factor Name**: GAN_GRU Factor **Factor Construction Idea**: Derived from the GAN_GRU model, this factor encodes volume-price time-series features to predict stock returns[4][13][41] **Factor Construction Process**: - The factor is generated using the output of the GAN_GRU model, which combines GAN-based feature generation and GRU-based time-series encoding[4][13][41] - The factor undergoes industry and market capitalization neutralization, as well as standardization, before being used for testing[22] **Factor Evaluation**: The GAN_GRU factor demonstrates strong predictive power across various industries, with consistent outperformance in recent years[4][13][41] --- Factor Backtesting Results - **GAN_GRU Factor**: - **IC Mean**: 11.36%[41][42] - **ICIR (Non-Annualized)**: 0.88[42] - **Turnover Rate**: 0.83[42] - **Recent IC**: -2.56%[41][42] - **1-Year IC Mean**: 8.94%[41][42] - **Annualized Return**: 38.09%[42] - **Annualized Volatility**: 23.68%[42] - **IR**: 1.61[42] - **Maximum Drawdown**: 27.29%[42] - **Annualized Excess Return**: 23.52%[41][42]

Core Insights - The overall performance of the lead-zinc industry in the first half of 2025 is positive, with a total revenue of 40.827 billion yuan, a year-on-year increase of 14.12%, and a net profit of 3.265 billion yuan, up 47.46% [1][2] - The demand for lead-zinc products is rising due to increased activity in various sectors, particularly in the power and transportation industries, driven by the popularity of electric vehicles and advancements in AI technology [1][3] Group 1: Revenue and Profit Growth - Over 70% of the 11 listed lead-zinc companies reported both revenue and net profit growth year-on-year, with eight companies achieving this feat [2] - Six companies reported revenue exceeding 1 billion yuan, with Yunnan Chihong Zinc & Germanium and Zhuzhou Smelter Group both surpassing 10 billion yuan, at 10.581 billion yuan and 10.412 billion yuan respectively [2] - Xizang Zhufeng reported the highest revenue growth rate at 53.53% year-on-year [2] Group 2: Net Profit Performance - Seven companies achieved net profits exceeding 100 million yuan, with Chihong Zinc & Germanium, Zhuzhou Smelter Group, and Guocheng Mining leading the industry with net profits of 932 million yuan, 585 million yuan, and 521 million yuan respectively [3] - Guocheng Mining experienced the highest net profit growth rate at 1111.34% year-on-year [3] Group 3: Industry Trends and Developments - The lead-zinc industry is benefiting from a supply-demand imbalance, leading to price increases, while companies are optimizing production processes to reduce costs [3] - Several companies are accelerating the development of overseas mineral resource projects, enhancing their resource security and international market presence [4] - Huayu Mining has made significant progress on its project in Ethiopia, completing necessary approvals and preparations for construction [4] - Xizang Zhufeng is advancing its lithium extraction project in Argentina, focusing on the main engineering construction in the second half of the year [4]

Core Viewpoint - Yunnan Chihong Zinc & Germanium Co., Ltd. reported a revenue of 10.581 billion yuan for the first half of 2025, marking a year-on-year increase of 7.67%, with a net profit attributable to shareholders of 932 million yuan, up 3.27% [1] Group 1: Financial Performance - The company achieved a net profit of 919 million yuan after deducting non-recurring items, reflecting a year-on-year growth of 12.11% [1] - The net cash flow from operating activities reached 2.158 billion yuan, showing a significant increase of 34.73% [1] Group 2: Resource Strategy - The company advanced 16 resource exploration projects in the first half of the year, adding 280,000 tons of lead and zinc resources, with total reserves of 1.881 million tons of lead and 3.771 million tons of zinc by the end of the reporting period [2] - The company maintained a leading position in the industry with a stable cost of lead and zinc concentrate production, achieving a six-year consecutive reduction [2] Group 3: Project Development - The construction of the Hulunbuir Chihong Precious Metals Comprehensive Recovery and Smelting Project has been completed, and the lead-zinc smelting efficiency enhancement project has commenced, which will add 100,000 tons per year of lead-zinc smelting capacity upon completion [2] Group 4: Innovation and Sustainability - The company has authorized 106 new patents, including 12 invention patents, and has achieved external licensing of its independent patents for the first time [2] - The company has established four national-level green mines and four national-level green factories, achieving a 100% completion rate for green mines and a 66.67% completion rate for green factories [2] Group 5: Future Outlook - The company aims to focus on high-quality collaborative development across the entire lead-zinc-germanium industry chain, benchmarking against world-class standards, and will continue to deepen its industry chain layout [3] - The company plans to accelerate resource integration and technological upgrades, enhancing its competitiveness through innovation-driven initiatives [3]

Core Viewpoint - Chihong Zn & Ge Co., Ltd. reported a year-on-year increase in both revenue and net profit for the first half of 2025, indicating positive financial performance and operational efficiency improvements [1] Financial Performance Summary - Total revenue reached 10.581 billion yuan, up 7.67% year-on-year [1] - Net profit attributable to shareholders was 932 million yuan, an increase of 3.27% year-on-year [1] - In Q2 2025, total revenue was 5.437 billion yuan, reflecting a 5.47% year-on-year growth [1] - Q2 net profit attributable to shareholders was 438 million yuan, up 5.45% year-on-year [1] Key Financial Ratios - Gross margin improved to 19.77%, an increase of 11.41% year-on-year [1] - Net margin decreased to 8.75%, down 4.24% year-on-year [1] - Total expenses (selling, administrative, and financial) amounted to 627 million yuan, accounting for 5.92% of revenue, up 11.57% year-on-year [1] Cash Flow and Assets - Operating cash flow per share increased by 34.73% to 0.42 yuan [1] - Cash and cash equivalents decreased by 36.09% to 802 million yuan [1] - Accounts receivable decreased by 32.67% to 224 million yuan [1] Cost and Expense Analysis - Sales expenses rose by 44.1% due to increased compensation for marketing personnel and higher transportation costs [2] - Management expenses increased by 23.91% due to higher compensation accruals [5] - Financial expenses decreased by 21.71% as interest-bearing debt levels declined [5] Investment and Future Outlook - The company expects a slight increase in the complete cost of lead and zinc concentrate in 2025 due to operational changes, but overall costs are projected to remain competitive within the industry [4] - Analysts predict a performance of 1.938 billion yuan for 2025, with an average earnings per share of 0.38 yuan [3]

Group 1 - The company achieved an operating income of approximately 10.581 billion yuan in the first half of 2025, representing a year-on-year increase of 7.67% [1] - The net profit attributable to shareholders was approximately 932 million yuan, reflecting a year-on-year growth of 3.27% [1] - The company plans to distribute a cash dividend of 0.3 yuan per 10 shares (including tax) to all shareholders [1] Group 2 - The company produced 151,600 tons of lead and zinc concentrate in the first half of 2025, an increase of 3,400 tons, or 2.29% year-on-year [1] - The production of lead and zinc products was 329,200 tons, a decrease of 24,700 tons, or 6.98% year-on-year, primarily due to maintenance activities [1] - The company is optimizing production organization to ensure stable and efficient production in the second half of the year [1] Group 3 - The company is enhancing its zinc alloy industry layout, with a new zinc alloy project in Weize expected to produce 60,000 tons annually starting in 2024, increasing total zinc alloy capacity to 220,000 tons per year [2] - The company plans to develop 18 new zinc alloy grades in 2025, increasing the total number of zinc alloy grades to 175 [2] - The company announced a joint investment with Chalco Group, China Aluminum, Yunnan Copper, and Chalco Capital to establish a new limited liability company, with the company contributing 300 million yuan for a 20% stake [2][3] Group 4 - The new company will serve as a unified and efficient rare metal operation platform for Chalco Group, focusing on germanium as a key metal [3] - The establishment of the new company aims to integrate resources such as technology, talent, capital, and market from Chalco Group to achieve scale effects and innovation synergy [3] - The new company will also manage other metals like gallium, selenium, tellurium, and bismuth, allowing the company to benefit from the high-value downstream operations of various rare metals [3]

Core Viewpoint - The company reported its 2025 semi-annual results, showing a steady growth in revenue and net profit, indicating a positive outlook for the lead-zinc industry [1] Financial Performance - In the first half of 2025, the company's operating revenue reached 10.581 billion yuan, a year-on-year increase of 7.67% [1] - The net profit attributable to shareholders was 932 million yuan, up 3.27% year-on-year, while the net profit excluding non-recurring items was 919 million yuan, reflecting a 12.11% increase [1] Production and Pricing - The lead-zinc concentrate production in H1 2025 was 151,600 tons, an increase of 3,400 tons year-on-year, with lead and zinc production changing by +13.8% and +1.3% respectively [1] - Zinc processing fees showed a significant upward trend, although the refined lead-zinc product output decreased by 6.98% year-on-year to 329,200 tons due to maintenance impacts [1] Cost and Expenses - The company's sales, management, and R&D expenses were 32 million, 554 million, and 63 million yuan respectively, with year-on-year changes of +44.10%, +23.91%, and +41.06%, primarily due to increased salary provisions [1] Future Outlook - The company is a leading player in the lead-zinc industry with excellent resource endowment, holding over 32 million tons of lead-zinc resources and maintaining production costs in the top 25% of the industry [1] - Asset injection is ongoing, with the 100% equity of Qinghai Hongxin already injected into the company and the formal management of Yun Copper [1] Investment Recommendations - The company is expected to maintain growth due to its rich lead-zinc resources, with projected net profits of 1.862 billion, 2.017 billion, and 2.363 billion yuan for 2025-2027, and corresponding EPS of 0.37, 0.40, and 0.47 yuan per share [1]

Core Viewpoint - Chihong Zn & Ge Co., Ltd. reported stable production and steady growth in performance for the first half of 2025, with a buy rating recommended by Minsheng Securities [1][2]. Financial Performance - In H1 2025, the company achieved operating revenue of 10.581 billion yuan, a year-on-year increase of 7.67% - The net profit attributable to shareholders was 932 million yuan, up 3.27% year-on-year - The net profit after deducting non-recurring items was 919 million yuan, reflecting a 12.11% increase year-on-year - For Q2 2025, the company reported operating revenue of 5.437 billion yuan, a year-on-year increase of 5.47% and a quarter-on-quarter increase of 5.69% - The net profit attributable to shareholders for Q2 was 438 million yuan, up 5.45% year-on-year but down 11.42% quarter-on-quarter [2]. Mining Operations - The metal production of lead and zinc in H1 2025 was 151,600 tons, with a year-on-year increase of 3,400 tons - Lead production increased by 13.8% year-on-year, while zinc production decreased by 1.3% - The domestic lead price in H1 2024 was 16,827 yuan/ton, down 0.38% year-on-year, while the zinc price was 23,328 yuan/ton, up 5.18% year-on-year - Prices for germanium ingots and germanium dioxide saw significant increases of 61.92% and 57.68% year-on-year, respectively [3]. Smelting Operations - The production of lead and zinc refined products in H1 2025 was 329,200 tons, a decrease of 6.98% year-on-year - Zinc alloy production increased by 17.23% year-on-year to 109,500 tons - The production of germanium products was 32.58 tons, down 4.99% year-on-year - Silver production increased by 16.44% year-on-year to 87.32 tons, while gold production decreased by 25.13% to 116.26 kg - The processing fees for zinc concentrate showed a significant upward trend due to the recovery of overseas mines and increased global supply [4]. Future Outlook - The company is a leader in the lead and zinc industry with abundant resources, holding over 32 million tons of lead and zinc resources - The company is undergoing asset injections, including the 100% stake in Qinghai Hongxin and the management of 81.12% stake in Yunnan Copper Zinc Industry, which is expected to enhance resource endowment and metal production in the future - Forecasted net profits for 2025, 2026, and 2027 are 1.862 billion yuan, 2.017 billion yuan, and 2.363 billion yuan, respectively, with EPS of 0.37 yuan, 0.40 yuan, and 0.47 yuan per share [4].

Investment Rating - The report maintains a "Recommended" rating for the company, indicating an expected stock price increase of over 15% relative to the benchmark index [6][11]. Core Views - The company has shown stable production and steady growth in performance, with a revenue of 10.581 billion yuan in the first half of 2025, a year-on-year increase of 7.67%, and a net profit attributable to shareholders of 932 million yuan, up 3.27% year-on-year [1]. - The company is a leader in the lead-zinc industry with excellent resource endowments, and its lead-zinc resource volume exceeds 32 million tons [3]. - The company is undergoing asset injections, including the full acquisition of Qinghai Hongxin and the management of Yun Copper Zinc Industry and Jinding Zinc Industry, which are expected to enhance resource endowments and metal production in the future [3]. Summary by Sections Production and Pricing - The company's lead-zinc concentrate production in H1 2025 was 151,600 tons, a slight increase of 3,400 tons year-on-year, with lead production up 13.8% and zinc production down 1.3% [2]. - Domestic lead prices in H1 2024 were 16,827 yuan/ton, down 0.38% year-on-year, while zinc prices were 23,328 yuan/ton, up 5.18% year-on-year, indicating overall price stability [2]. Smelting Operations - The production of refined lead-zinc products in H1 2025 was 329,200 tons, a decrease of 6.98% year-on-year, while zinc alloy production increased by 17.23% [3]. - The processing fees for zinc have shown a significant upward trend, primarily due to the resumption of overseas mines and an increase in global zinc concentrate supply [3]. Financial Performance - The company reported a net profit of 932 million yuan in H1 2025, with a year-on-year growth of 3.27%, and a net cash flow from operating activities of 2.158 billion yuan, up 34.73% year-on-year [1][3]. - The company plans to distribute a cash dividend of 0.3 yuan per share, totaling 150 million yuan, with a payout ratio of 16.1% [1]. Future Outlook - The company is expected to achieve net profits of 1.862 billion yuan, 2.017 billion yuan, and 2.363 billion yuan for the years 2025, 2026, and 2027, respectively, with corresponding EPS of 0.37 yuan, 0.40 yuan, and 0.47 yuan [3][5].