Western Mining(601168) 海通证券·2024-07-29 01:01Investment Rating - The report maintains an "Outperform" rating for the company [1] Core Views - The company's copper concentrate production increased by 42% YoY in H1 2024, with significant growth in copper and molybdenum concentrate output [3][4] - The company's H1 2024 revenue reached RMB 24.977 billion, up 10% YoY, with net profit attributable to shareholders of RMB 1.621 billion, up 8% YoY [3] - The company's gross margin improved to 21.06% in H1 2024, up 4.55 pct YoY, while net margin increased to 11.00%, up 1.10 pct YoY [4] - The company is actively expanding its production capacity, with the Yulong Copper Mine expansion project progressing as planned [4] - The report forecasts EPS of RMB 1.56, 1.87, and 1.95 for 2024-2026, with a target price range of RMB 20.23-21.79 based on 13-14x 2024 PE [5] Financial Performance - The company's revenue is expected to grow by 13.2% YoY in 2024 to RMB 48.397 billion, with net profit projected to increase by 32.9% YoY to RMB 3.708 billion [6] - Gross margin is forecasted to improve to 19.9% in 2024, up from 18.0% in 2023, with further increases to 20.6% and 21.0% in 2025 and 2026, respectively [6][9] - The company's ROE is expected to rise to 20.8% in 2024, up from 18.3% in 2023, and reach 21.1% in 2025 before declining slightly to 18.9% in 2026 [6][9] Business Segments - Copper products accounted for the majority of revenue in 2023 at RMB 28.466 billion, with a gross margin of 15.23%, expected to improve to 18.02% in 2024 [7] - Zinc products generated RMB 4.968 billion in revenue in 2023, with a gross margin of 15.40%, projected to increase to 16.92% in 2024 [7] - Molybdenum concentrate had the highest gross margin at 92.29% in 2023, with revenue of RMB 1.160 billion, expected to grow to RMB 1.189 billion in 2024 [7] Valuation and Comparables - The company's 2024E PE is estimated at 9.82x, lower than the industry average of 13.8x, with a PB of 2.04x and PS of 0.75x [9] - Comparable companies such as Zijin Mining and Luoyang Molybdenum have higher 2024E PE ratios of 14.6x and 14.1x, respectively [8]