中金岭南：铜铅锌产量平稳，冶炼业务利润承压

Investment Rating - The report maintains an "Outperform" rating for Zhongjin Lingnan (000060 SZ) [1][3][26] Core Views - In H1 2024, the company's revenue decreased by 17 7% YoY to RMB 30 6 billion, while net profit attributable to shareholders increased slightly by 0 3% to RMB 540 million [1][5] - The company's operating cash flow surged to RMB 770 million in H1 2024, compared to RMB 47 million in the same period last year, due to a low base effect and inventory adjustments [1][5] - Copper smelting has become a significant profit driver, contributing 50 7% of total revenue and 29% of gross profit in H1 2024 [1][7] - Lead and zinc smelting profits were under pressure due to a sharp decline in processing fees, with zinc processing fees falling to RMB 2,000/ton, below the cost range of RMB 4,000-5,000/ton for most smelters [1][25] Business Performance - In H1 2024, the company's cathode copper business achieved a gross profit of RMB 510 million, with a gross profit margin of RMB 2,450/ton and a net profit margin of RMB 1,230/ton [1][7] - The company's copper smelting business benefited from cost advantages and long-term supply contracts, despite copper concentrate shortages and historically low processing fees below USD 10/ton [1][7] - Lead and zinc smelting profits were negatively impacted by declining processing fees, with lead prices rising by RMB 1,800/ton but unable to offset the decline in smelting profits [1][5] Financial Forecasts - The report forecasts net profit attributable to shareholders of RMB 836 million, RMB 909 million, and RMB 1 288 billion for 2024, 2025, and 2026, respectively, with YoY growth rates of 21 5%, 8 7%, and 41 7% [1][26] - The company's EPS is projected to be RMB 0 22, RMB 0 24, and RMB 0 34 for 2024, 2025, and 2026, respectively, with a current PE ratio of 18 8x, 17 3x, and 12 2x [1][26] Industry and Market Position - The company is a leading producer in China's lead and zinc mining and smelting industry, with high-quality resources such as the Fankou Lead-Zinc Mine and total proven reserves of nearly 10 million tons of copper, zinc, and lead [1][26] - The acquisition of Dongying Fangyuan Copper Smelter has expanded the company's presence in the copper industry, further enhancing its growth potential [1][26]