CGN MINING(HK:01164)2024-06-02 07:31Investment Rating - The report maintains an "Outperform" rating for CGN Mining, with a target price of HK$3.39 per share, representing a potential upside of 21% [18][13][19]. Core Views - CGN Mining is positioned to capitalize on the global recovery of nuclear power and the increasing demand for natural uranium, aiming to become a leading international supplier of natural uranium [15][16]. - The company achieved significant revenue growth in 2023, with operating income reaching HK$7,368 million, a year-on-year increase of 101.04%, primarily driven by a substantial rise in natural uranium revenue [15][16]. - The global uranium market is experiencing a supply shortage, with demand projected to reach approximately 76,000 tons of uranium (tU) in 2024, while supply is expected to be only around 60,000 tU [17][18]. Summary by Sections Company Overview - CGN Mining is a subsidiary of CGNPC, the world's third-largest nuclear power group, and serves as the sole platform for overseas uranium resource development and financing under CGNPC [15][16]. Market Dynamics - The global uranium market is facing a supply-demand imbalance, exacerbated by the depletion of uranium mines in Kazakhstan and the expected reduction in the lifespan of active mines starting in 2028 [17][18]. - The recent U.S. legislation banning the import of Russian uranium is anticipated to increase demand for uranium in the U.S. and other Western countries, further driving up nuclear fuel costs [16][18]. Production Capacity - CGN Mining's current production in Kazakhstan is maintained at 80% of the allowable level, with plans to increase this to over 90% by 2024-2025. The total production capacity is projected to reach 3,969 tons/year by 2025 [18][19]. Financial Projections - The company’s projected main operating revenues for FY24-26 are HK$9,203 million, HK$11,267 million, and HK$13,162 million, respectively, with corresponding net profits of HK$543 million, HK$642 million, and HK$745 million [18][19].