Chihong Zinc(600497) Huachuang Securities·2024-10-25 14:14Investment Rating - The report maintains a "Strong Buy" rating for the company, expecting it to outperform the benchmark index by over 20% in the next six months [1][12]. Core Views - The company's performance in the first three quarters of 2024 met expectations, with revenue and net profit showing a decline year-on-year, but a recovery in the third quarter due to rising lead, zinc, and germanium prices [2][3]. - The report forecasts net profits for 2024-2026 to be 1.86 billion, 2.27 billion, and 2.34 billion yuan respectively, with year-on-year growth rates of 29.8%, 22.2%, and 2.7% [2][3]. Financial Performance Summary - For the first three quarters of 2024, the company achieved a total revenue of 14.65 billion yuan, a year-on-year decrease of 11.19%, and a net profit of 1.47 billion yuan, down 15.79% year-on-year [1][2]. - In Q3 2024, the company reported revenue of 4.83 billion yuan, a year-on-year decline of 11.48%, but a quarter-on-quarter increase of 37.5% in net profit to 571 million yuan [1][2]. - The average prices for lead, zinc, and germanium increased significantly in Q3 2024, with year-on-year increases of 13.3%, 12.4%, and 65.9% respectively [2]. Production and Cost Analysis - The company’s production of lead and zinc concentrates decreased year-on-year, with lead metal production at 58.6 thousand tons (down 12%) and zinc metal production at 171.7 thousand tons (down 10%) [2]. - The processing fees for lead and zinc saw a significant decline, with processing fees down 38% and 42.9% year-on-year for the first three quarters [2]. Valuation and Price Target - The target price for the company is set at 6.2 yuan, based on a 14x PE ratio for 2025, reflecting the valuation of comparable companies [2][3].