Western Mining(SH:601168) Huafu Securities·2024-05-15 02:00Investment Rating - The report assigns a "Buy" rating to Western Mining (601168 SH) with a target price of 29 14 RMB [2][3] Core Views - Western Mining is a leading mining enterprise in western China with a diversified portfolio of copper lead zinc iron and nickel resources The company operates 14 mines with significant resource reserves including 6 05 million tons of copper 1 55 million tons of lead and 2 70 million tons of zinc [2] - The company is expected to maintain growth through both mining and salt lake operations Key projects include the expansion of the Yulong Copper Mine which is expected to increase copper production to 200 000 tons annually and the development of a magnesium and lithium industrial chain leveraging salt lake resources [2] - Western Mining has demonstrated stable financial performance with a revenue of 42 748 billion RMB in 2023 a 6 24% YoY increase The company has a strong dividend policy having distributed 71 49 billion RMB in cumulative cash dividends since its IPO representing 56 16% of cumulative distributable profits [2][7] Financial Projections - The report forecasts net profits of 3 86 billion 4 60 billion and 5 33 billion RMB for 2024 2025 and 2026 respectively with corresponding EPS of 1 62 1 93 and 2 24 RMB per share [2][8] - Revenue is expected to grow to 50 337 billion 54 153 billion and 57 228 billion RMB in 2024 2025 and 2026 respectively driven by increased production and higher metal prices [5] Key Assumptions - Copper production is expected to increase to 15 9 18 0 and 20 0 million tons in 2024 2025 and 2026 respectively due to the expansion of the Yulong Copper Mine [6] - Lead and zinc production is expected to remain stable at 5 2 million tons and 11 0 million tons respectively due to declining ore grades [6] - Copper prices are projected to rise to 75 000 78 000 and 80 000 RMB per ton in 2024 2025 and 2026 respectively driven by favorable macroeconomic conditions and supply-demand dynamics [6] Industry Analysis - Global copper supply is expected to grow by 68 60 and 52 million tons in 2024 2025 and 2026 respectively with major contributions from projects in Congo Chile and Mexico [57][59] - Demand for copper is expected to be driven by the growth of the new energy sector including electric vehicles and renewable energy with global copper demand projected to reach 2 734 2 826 and 2 876 million tons in 2024 2025 and 2026 respectively [69][70] - The global copper market is expected to remain in a supply deficit with projected deficits of 280 000 310 000 and 240 000 tons in 2024 2025 and 2026 respectively [71]