SDR(SZ:000603) Haitong Securities·2024-05-06 08:02Investment Rating - The investment rating for the company is "Outperform the Market" [8]. Core Views - The company has a broad space for organic growth and is expected to actively pursue mergers and acquisitions of quality precious metal resources, aiming to complete one acquisition project within the year to enhance its mineral resource reserves and sustainable profitability [6][7]. - The company reported a 19.92% year-on-year increase in operating revenue for 2023, reaching 2.254 billion yuan, but experienced a significant decline in net profit attributable to shareholders, which fell by 59.41% to 148 million yuan [8][9]. - The company plans to distribute a cash dividend of 0.75 yuan per 10 shares, totaling 51 million yuan, with a dividend payout ratio of 34.76% [8]. Financial Performance Summary - In 2023, the company produced 145 tons of silver, 13,462 tons of lead, and 24,825 tons of zinc, with respective year-on-year declines of 28.53%, 7.97%, and 8.54% [9]. - The average prices for silver, lead, and zinc in 2023 were 5,562 yuan/kg, 15,759 yuan/ton, and 21,646 yuan/ton, showing year-on-year changes of 18%, 3%, and -14% respectively [9]. - The company’s financial forecasts for 2024 to 2026 predict earnings per share (EPS) of 0.50, 0.79, and 0.99 yuan, respectively, with a projected price-to-earnings (P/E) ratio of 27-28 times for 2024, leading to a reasonable value range of 13.40-13.90 yuan per share [19][24]. Business Development and Projects - The company is advancing several silver increment projects, including the integration of mining rights and deep exploration at Yindu Mining, and is working on obtaining construction approvals for Dongsheng Mining, aiming to start construction within 2024 [18]. - The company is also accelerating technical renovations at Jinshan Mining, with plans to complete acceptance of the technical transformation by the end of Q3 2024 [18]. Comparative Valuation - The company’s silver business has a high gross profit margin and is expected to benefit from rising silver prices, indicating a favorable investment opportunity as production projects come online [19]. - The average EPS for comparable companies in 2023 is 0.51 yuan, with a projected P/E ratio of 39.0 for 2023 [12].