Chihong Zinc(SH:600497) HTSC·2025-03-30 09:27Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of RMB 6.08 [8][9]. Core Views - The company reported a revenue of RMB 18.803 billion in 2024, a year-on-year decrease of 14.80%, and a net profit attributable to shareholders of RMB 1.293 billion, down 14.24% year-on-year, which was below previous expectations of RMB 2.238 billion for 2024 [1][5]. - The fourth quarter of 2024 saw a revenue of RMB 4.151 billion, a year-on-year decline of 25.48% and a quarter-on-quarter decrease of 13.98%, with a net loss of RMB 181 million [1][2]. - The company is expected to see future profitability growth in its germanium segment, leading to the maintenance of the "Accumulate" rating despite current cost pressures [1][5]. Summary by Sections Financial Performance - In 2024, the company sold 485,400 tons of zinc ingots and 166,000 tons of lead ingots, both showing a decrease of approximately 5.97% and 5.88% year-on-year, respectively [2]. - The overall gross margin for 2024 was 17.71%, an increase of 0.60 percentage points year-on-year, but the fourth quarter gross margin dropped to 11.29%, a decrease of 11.85 percentage points quarter-on-quarter due to rising costs from decreased self-sufficiency in mining [2]. Production Capacity - The company has an annual production capacity of 420,000 tons for lead and zinc metals, with stable refining capacity of 630,000 tons per year [3]. - A new mining project in Tibet, with a designed capacity of 200,000 tons per year, is expected to begin trial production in the second half of 2024 and officially start operations in 2025 [3]. Resource Integration and Market Position - The company accelerated resource integration in 2024 through acquisitions, significantly enhancing its lead and zinc resource reserves and production capabilities [4]. - The asset-liability ratio decreased by 1.62 percentage points year-on-year to 28.77%, indicating improved financial stability [4]. Profit Forecast and Valuation - Due to ongoing cost recovery challenges, the report adjusts cost assumptions and lowers price expectations, forecasting EPS of RMB 0.38, RMB 0.42, and RMB 0.45 for 2025 to 2027, respectively [5]. - The target price is set at RMB 6.08, reflecting a price-to-earnings ratio of 16 times for 2025, up from 12.7 times previously [5].