Sinomine(SZ:002738) Changjiang Securities·2024-05-15 09:32Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - Despite a significant drop in lithium prices in 2023, the company maintained strong profitability due to increased lithium salt production capacity and improved ore self-supply ratio, driven by both volume growth and cost reduction [6][7]. - The copper segment is expected to contribute significantly to the company's core earnings growth, with plans for a long-term production target of 100,000 tons of copper annually [5][6]. - The company is strategically expanding its lithium and copper resources, with ongoing projects in Zimbabwe and Zambia, which are anticipated to enhance resource reserves and production capacity [7]. Summary by Sections Financial Performance - In 2023, the company's net profit attributable to shareholders was 2.208 billion yuan, a year-on-year decrease of 33%. The net profit for Q4 2023 was 138 million yuan, down 89% year-on-year and 76% quarter-on-quarter [6]. - For Q1 2024, the net profit attributable to shareholders was 256 million yuan, a year-on-year decrease of 77%, but an 86% increase quarter-on-quarter [6][10]. Lithium Segment - The lithium salt segment generated revenue of 4.243 billion yuan in 2023, a decrease of 33% year-on-year, but the gross margin increased by 3.99 percentage points to 57.78% [6]. - The company achieved a lithium salt production of 18,400 tons in 2023, a decrease of 20% year-on-year, with a self-supply rate increasing by 65 percentage points to 86% [6][7]. Copper Segment - The company plans to acquire a 65% stake in the Kitumba copper mine in Zambia, which is expected to enhance resource reserves [7]. - The acquisition of a 98% stake in the Tsumeb copper smelter in Namibia is also underway, with plans for capacity upgrades [7]. Cost Management - The company is implementing measures to reduce costs, including transitioning from diesel power to municipal and solar power for mining operations [7]. - The gross margin for Q1 2024 improved to 38.07%, reflecting cost management efforts despite a decline in lithium prices [10].