Soochow Securities·2024-06-26 10:30Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [1]. Core Views - The company has established a strong international presence in the mining sector, with a diversified portfolio across three major regions: domestic, Congo (DRC), and Serbia. This strategic positioning enhances its competitiveness in the global market [2][3]. - The company has a robust revenue structure, with copper and gold contributing significantly to its income and profitability. In 2023, copper and gold accounted for 25% and 42% of total revenue, respectively, with gross profit contributions of 47% and 25% [2][29]. - The company is well-positioned to benefit from rising copper and gold prices, driven by supply constraints and increasing demand, particularly in the renewable energy sector [35][47]. Summary by Sections 1. International Resource Layout - The company has successfully completed a global resource layout, acquiring high-quality assets during market downturns, which has led to steady revenue growth. The average acquisition cost for copper and gold is significantly lower than industry peers [18][20]. - As of the end of 2023, the company operates 30 mines across 16 countries, ranking as the fifth-largest copper producer and seventh-largest gold producer globally [23][25]. 2. Long-term Outlook for Copper and Gold - The long-term outlook for copper is positive due to supply constraints and stable demand growth driven by the renewable energy sector. The company anticipates a compound annual growth rate (CAGR) of 9% for copper production from 2023 to 2028 [35][44]. - Gold prices are expected to rise as the Federal Reserve is anticipated to lower interest rates, which will enhance the investment appeal of gold [47]. 3. Competitive Advantages - The company employs a "Five Rings Unified" management model that enhances operational efficiency and cost control, positioning it favorably against international competitors [3][29]. - The company has maintained a high return on equity (ROE) of 21% in 2023, reflecting its strong profitability and effective management strategies [34]. 4. Financial Projections and Valuation - The report projects earnings per share (EPS) of 1.04, 1.34, and 1.55 for 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (P/E) ratios of 16.73, 13.03, and 11.29 [1][4]. - The company's current P/E ratio is lower than that of comparable companies, indicating potential for valuation expansion [4].