NNCI(SH:600301) SINOLINK SECURITIES·2024-10-24 10:03Investment Rating - The report assigns a "Buy" rating for the company, marking it as the first coverage with a target price of RMB 32.00 [1][4]. Core Views - The company is positioned as a leading player in the tin and antimony market in South China, benefiting from rising prices in these commodities. The report anticipates significant growth in revenue and net profit over the next few years, driven by increased production and favorable market conditions [3][4]. Company Overview - The company, Guangxi Huaxi Nonferrous Metals Co., Ltd., is a major state-owned enterprise in the nonferrous metals sector, focusing on the exploration, mining, and processing of various metals including tin, zinc, lead, and antimony. It underwent a significant transformation in January 2023, transitioning from a trading company to a leading tin metal enterprise [15][18][20]. Financial Performance - The company reported a substantial increase in revenue and net profit in 2023, with revenue reaching RMB 2.924 billion and net profit at RMB 314 million. The first half of 2024 is expected to show continued growth, with revenue projected at RMB 4.882 billion and net profit at RMB 824 million, reflecting a year-on-year increase of 108% [2][20]. Industry Analysis - The tin industry is entering a supply-demand reversal year, with global tin supply expected to decrease significantly due to reduced output from major producers like Indonesia and Myanmar. This is anticipated to lead to a sustained increase in tin prices [3][41]. - The report highlights that the demand for tin is driven by sectors such as semiconductors and renewable energy, with a projected CAGR of 5.4% in the global PCB market, which is a significant consumer of tin [38][43]. Production Capacity and Growth - The company has a robust production capacity with several mining projects, including the Gaofeng and Tongkeng mines, which are expected to see increased output. The report estimates a compound annual growth rate (CAGR) of 30% in antimony production from 2023 to 2026 [3][4][20]. - The company holds multiple exploration rights, indicating potential for resource expansion and further production increases in the future [3][4]. Valuation Metrics - The report projects earnings per share (EPS) of RMB 1.30, RMB 2.00, and RMB 2.44 for the years 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (P/E) ratios of 12.9, 8.4, and 6.9 [2][4].