Soochow Securities·2024-02-29 16:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company operates a "mining + trading" model globally, positioning itself as a leading resource player with significant growth potential in copper resources [1][4]. - The long-term supply constraints in copper and stable growth in cobalt reserves and production are expected to drive demand, particularly in the electric power and new energy sectors [3][4]. - The company has world-class quality resources and a synergistic growth model combining mining and trading, which enhances its competitive edge [4][3]. Summary by Sections 1. "Mining + Trading" Model and Global Layout - The company has two main business segments: mining (copper, cobalt, molybdenum, tungsten, niobium, and phosphorus) and mining trading, with revenue contributions of 15% and 85% respectively in 2022 [2][23]. - Since 2013, the company has made strategic acquisitions of overseas resources, becoming a leading producer of tungsten, cobalt, niobium, and molybdenum, as well as a significant copper producer [4][12]. 2. Long-term Supply Constraints in Copper and Stable Growth in Cobalt - Copper supply is expected to remain tight due to limited capital expenditure, geopolitical factors, and declining ore grades, with global refined copper consumption exceeding 25 million tons annually [3][29]. - Cobalt reserves and production are steadily increasing, driven by strong demand from the electric vehicle sector, with global cobalt reserves reaching 830,000 tons in 2022, a year-on-year increase of 9.2% [3][46]. 3. Core Competitiveness and Resource Advantages - The company possesses high-quality resources, with significant copper and cobalt reserves contributing to its performance [4][3]. - The company has successfully transformed resource advantages into cost advantages through strategic acquisitions and effective cost control measures, achieving a target of $500 million in cost reductions ahead of schedule [4][3]. - Continuous investment in research and development has led to technological innovations that enhance efficiency and reduce costs [4][3]. 4. Earnings Forecast and Valuation - The company is projected to achieve earnings per share (EPS) of 0.31, 0.44, and 0.55 yuan for 2023, 2024, and 2025 respectively, with corresponding price-to-earnings (P/E) ratios of 20, 14, and 11 times [2][4]. - The anticipated significant increase in copper production from TFM and KFM mines in 2024 is expected to drive future earnings growth [4][4].