ZHUYE GP(600961) 华福证券·2024-03-16 16:00Investment Rating - The report assigns a "Buy" rating for the company, indicating an expected relative price increase of over 20% compared to the market benchmark within the next six months [61]. Core Insights - The company has a smelting capacity of 100,000 tons/year for lead ingots and lead alloys, with silver and gold production at 609.3 tons/year and 8.26 tons/year respectively. In 2021, the company produced 108,000 tons of lead and lead ingots, 18,700 tons of zinc concentrate, 237 tons of silver, and 11.4 tons of gold, achieving a gross profit of 837 million yuan and a net profit of 399 million yuan, primarily from zinc concentrate, silver, and gold [1][4]. - The company is expected to achieve a cumulative net profit of 834 million yuan from the acquisition of the Shuikoushan lead-zinc mine from 2023 to 2025, with annual projections of 234 million, 305 million, and 295 million yuan respectively [4][5]. - The company has temporarily halted the acquisition of Wenkou Copper Industry due to market conditions but sees potential for future integration as state-owned enterprises consolidate [7]. Financial Projections - The company anticipates stable production of zinc ingots and alloys at 680,000 tons from 2023 to 2025, with expected production of zinc concentrate at 17,700 tons and lead concentrate at 18,000 tons during the same period [28]. - Revenue projections for 2023-2025 are estimated at 22.3 billion, 22.8 billion, and 22.8 billion yuan, with corresponding gross profits of 1.83 billion, 2.03 billion, and 2.03 billion yuan, leading to gross margins of 8.2%, 8.9%, and 8.9% respectively [36][41]. - The expected net profit for the company from 2023 to 2025 is projected at 700 million, 890 million, and 910 million yuan, with earnings per share (EPS) of 0.65, 0.83, and 0.85 yuan respectively [41]. Market Conditions - The report highlights that gold prices are expected to remain strong due to the end of the Federal Reserve's interest rate hikes and the anticipated first rate cut in June 2024, which is likely to support gold's safe-haven demand [13][17]. - Central banks globally have significantly increased gold purchases, reaching a 55-year high in 2022 with 1,136 tons, driven by inflation hedging and wealth preservation needs [26]. Valuation and Comparables - The report suggests a target price of 13.89 yuan per share based on a 17x price-to-earnings (PE) ratio for 2024, with comparable companies in the sector showing average valuations of 19, 17, and 14 times for the years 2023 to 2025 [41][42].