CMOC(603993) 天风证券·2024-11-11 03:43Investment Rating - The report initiates coverage on Luoyang Molybdenum with a "Buy" rating and a target price of 9.8 RMB per share, based on a 17x PE multiple for 2024 [1][3] Core Views - Luoyang Molybdenum is a global mining giant with a diversified portfolio of world-class assets, including copper, cobalt, molybdenum, tungsten, and niobium. It is the largest cobalt producer globally and a leading phosphate fertilizer producer in Brazil [1] - The company is entering a new phase of international expansion, aiming to double its production capacity over the next five years as part of its "Three-Step" strategy [1] - Copper prices are expected to rise steadily due to tight supply and growing demand, while cobalt prices are expected to rebound after a period of oversupply [1] - The TFM and KFM copper-cobalt projects are entering a phase of concentrated production release, with significant growth in output and profitability expected [1] Financial Performance and Valuation - Revenue is projected to grow from 186.27 billion RMB in 2023 to 222.90 billion RMB in 2026, with a CAGR of 5.85% [2] - Net profit attributable to shareholders is expected to increase from 8.25 billion RMB in 2023 to 15.90 billion RMB in 2026, with a CAGR of 10.08% [2] - The company's PE ratio is forecasted to decline from 14.08x in 2024 to 11.01x in 2026, indicating improving valuation metrics [2] Copper Market Outlook - Copper supply is constrained by declining capital expenditures, resource depletion, and limited scrap copper availability, while demand is supported by traditional sectors like power grid investments and emerging sectors like renewable energy [1][26] - The global copper market is expected to face a growing supply-demand gap, with copper prices projected to rise steadily in the medium to long term [26][53] Cobalt Market Outlook - Cobalt prices are expected to remain weak in the short term due to oversupply from the Democratic Republic of Congo and Indonesia, but demand is expected to grow at an 11% CAGR from 2023 to 2030, driven by the electric vehicle battery sector [1][57] - Luoyang Molybdenum has become the world's largest cobalt producer, surpassing Glencore, with a 24% global market share in 2023 [62] Production and Capacity Expansion - Luoyang Molybdenum's copper and cobalt production capacity has doubled, with copper output reaching 600,000 tons/year and cobalt output reaching 87,000 tons/year [1] - The company plans to further increase copper production to 800,000-1,000,000 tons/year and cobalt production to 90,000-100,000 tons/year over the next five years [1] Competitive Advantages - The company has leveraged counter-cyclical acquisitions to secure world-class mineral resources at low costs, giving it a competitive edge in resource development [1] - Its integrated mining and trading model, through the IXM platform, enhances operational efficiency and extends the value chain, creating synergies across its business segments [1]