ZANGGE MINING(000408) 华创证券·2024-12-12 10:40Investment Rating - The report gives a "Recommend" rating for the company with a target price of 33.3 yuan [1] Core Views - The company is a significant producer of potassium and lithium salts in China, with high dividend payouts to shareholders [1] - The company's potassium chloride production capacity is expected to double in the future, supported by domestic and international resource expansion [1][8] - The company has mastered the "one-step" lithium extraction technology, with a lithium recovery rate of over 95%, and is expanding its lithium carbonate production capacity [1][9] - The company holds a 30.78% stake in Julong Copper, which contributes significantly to its net profit, with further growth expected from Julong Copper's expansion projects [1][9] Business Overview Potassium Business - The company is the second-largest potassium chloride producer in China, with a production capacity of 2 million tons and a production volume of 1.0942 million tons in 2023 [1][8] - The company is actively expanding its potassium resources both domestically and internationally, with projects in Qinghai and Laos [1][8] - The company's potassium chloride business contributed 61.53% of its total revenue in 2023, with a gross margin of 56.20% [1][8] Lithium Business - The company has a lithium carbonate production capacity of 10,000 tons, with a production volume of 12,100 tons in 2023 and a single-ton cost of 37,000 yuan [1][9] - The company holds a 24% stake in the Mami Cuo Salt Lake, which has a lithium carbonate reserve of 2.1774 million tons, with plans to expand production capacity to 100,000 tons in the future [1][9] - The company's lithium carbonate business contributed 37.89% of its total revenue in 2023, with a gross margin of 80.51% [1][9] Copper Business - The company holds a 30.78% stake in Julong Copper, which is the largest copper mine in China by resource volume, with a copper resource of 25.88 million tons [1][9] - Julong Copper contributed 37.90% of the company's net profit in 2023, and this proportion increased to 72.96% in the first three quarters of 2024 [1][9] - Julong Copper's Phase II expansion project is expected to start trial production in Q1 2026, with a planned copper production capacity of 30-35 million tons per year [1][9] Financial Performance - In 2023, the company achieved a revenue of 5.226 billion yuan, a year-on-year decrease of 36.22%, and a net profit of 3.42 billion yuan, a year-on-year decrease of 39.52% [1][7] - The company's high dividend payout ratio exceeded 70% in both 2022 and 2023, with cumulative cash dividends of 7.02 billion yuan over the two years [1][7] - The company's net profit is expected to be 2.5 billion yuan, 2.77 billion yuan, and 4.29 billion yuan in 2024, 2025, and 2026, respectively, with year-on-year growth rates of -27%, +11%, and +54.9% [1][11] Industry Analysis Potassium Industry - The global potassium salt reserves are concentrated in Canada, Belarus, and Russia, with China accounting for only 5% of the global reserves [103][104] - China's potassium chloride production has been stagnant, with a production volume of 6.72 million tons in 2023, a year-on-year decrease of 10.3% [112] - China's potassium chloride import dependency reached 63% in 2023, with imports mainly from Belarus, Russia, and Canada [112] Lithium Industry - The global lithium supply is expected to increase, with a focus on lithium extraction from salt lakes and hard rock mines [52][53] - The demand for lithium is driven by the growth of the electric vehicle and energy storage industries, with global lithium demand expected to reach 1.2 million tons of LCE by 2026 [59][60] Copper Industry - Julong Copper is the largest copper mine in China by resource volume, with a copper resource of 25.88 million tons and a production capacity of 150,000 tons per year [9][64] - The Phase II expansion project of Julong Copper is expected to increase its production capacity to 30-35 million tons per year by 2026 [9][50]