Chihong Zinc(600497) Haitong Securities·2024-10-28 03:15Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [1] Core Views - The company's Q3 performance shows a sequential improvement with a narrowing year-on-year decline. For the first three quarters of 2024, the company achieved operating revenue of 14.652 billion yuan, a year-on-year decrease of 11.19%, and a net profit attributable to shareholders of 1.474 billion yuan, down 15.79% year-on-year. In Q3 alone, the operating revenue was 4.825 billion yuan, a year-on-year decline of 11.48%, but a sequential increase of 37.51% [4] - The mining segment is expected to recover gradually, with zinc and lead production improving sequentially despite some production interruptions. The company plans to increase its lead and zinc metal reserves by no less than 350,000 tons through internal exploration and external acquisitions [5] - The rising prices of lead and zinc are favorable for the mining segment, while the smelting segment faces pressure due to declining processing fees. The average zinc price in Q3 2024 was 23,600 yuan per ton, up 13.2% year-on-year, and the average lead price was 18,000 yuan per ton, up 10.9% year-on-year [4][5] Financial Summary - For 2024, the company is expected to benefit from strong lead, zinc, and germanium prices, supporting the performance of its mining segments. The estimated EPS for 2024, 2025, and 2026 are 0.35, 0.46, and 0.49 yuan per share, respectively. The company is valued at a PE ratio of 18-19 times for 2024, corresponding to a reasonable value range of 6.30-6.65 yuan per share [5][6] - The company's operating revenue is projected to grow from 21.954 billion yuan in 2023 to 23.290 billion yuan in 2024, with a net profit expected to rise from 1.433 billion yuan to 1.781 billion yuan during the same period [6][8]