Core Viewpoint - The copper market is experiencing a mixed fundamental outlook, with supply concerns heightened by a decrease in copper concentrate processing fees and a production cut forecast from Chile's Codelco, while demand expectations are improving marginally due to the upcoming peak season [1] Group 1: Supply Dynamics - Copper concentrate processing fees have fallen into negative territory, raising supply concerns [1] - Codelco, a major Chilean copper producer, has lowered its annual production forecast, exacerbating supply worries [1] Group 2: Demand Outlook - Social inventory has decreased over the past week, although the absolute level remains low, leading to improved demand expectations as the peak season approaches [1] - The upcoming "golden September and silver October" period is anticipated to drive marginal improvements in demand [1] Group 3: Market Sentiment - The collective inventory accumulation across LME, COMEX, and SHFE indicates weak terminal consumption during the off-season [1] - Increased uncertainty regarding the Federal Reserve's interest rate cut schedule has dampened market sentiment, limiting financial support for copper prices [1] Group 4: Overall Market Outlook - The copper market is characterized by a coexistence of tight supply and inventory accumulation, alongside fluctuating macroeconomic drivers, suggesting a short-term oscillation in price [1] - The market is awaiting validation of demand during the peak season and clearer policy signals [1]

Group 1 - Recent domestic copper concentrate processing fees have rebounded, indicating a significant easing of supply tightness due to additional concentrate supply entering the market [2][3] - The domestic refined copper supply for the first half of the year was approximately 7.75 million tons, a year-on-year increase of 7.56%, driven by production growth [5] - The overall refined copper supply in China is expected to remain sufficient, with domestic smelters maintaining high production levels despite seasonal maintenance [6] Group 2 - Domestic copper social inventory has shown signs of recovery, primarily due to increased imports, while U.S. copper inventory continues to rise [7][8] - The copper price is expected to experience a downward adjustment in the short term, but the long-term outlook remains positive due to underlying support factors [9][10] - The demand for copper in the second half of the year is anticipated to remain strong in China, while overseas demand may follow a high-low trend [7]

Investment Rating - The investment rating for the company is "Outperform the Market" [4][36]. Core Views - The company is expected to achieve a revenue of 145.5 billion yuan in 2024, representing a year-on-year growth of 5.9%. The net profit attributable to the parent company is projected to be 2.81 billion yuan, a 4.1% increase year-on-year, while the non-recurring net profit is expected to reach 2.69 billion yuan, showing a significant growth of 43.9% [5][6]. - The company’s copper smelting cost competitiveness is strong, and the second phase of the Mirador project is set to commence production in mid-2025, which will increase the company's copper mining capacity to 310,000 tons, ranking third among A-share copper companies [2][6]. Financial Performance and Forecast - In 2024, the company is expected to generate a net profit of 2.81 billion yuan, with a revenue of 145.5 billion yuan. The operating cash flow is projected to decline to 1.54 billion yuan, a decrease of 74.1% due to increased raw material inventory and new smelting capacity coming online [5][6]. - The company’s copper production is forecasted to be 155,000 tons in 2024, a decrease of 20,000 tons year-on-year, primarily due to power shortages in Ecuador affecting the Mirador copper mine [6][7]. - The estimated net profits for 2025-2027 are projected to be 2.885 billion yuan, 4.397 billion yuan, and 4.561 billion yuan, respectively, with year-on-year growth rates of 2.7%, 52.4%, and 3.7% [2][34]. Segment Analysis - In the smelting segment, the company’s profitability is expected to decline in the second half of 2024, but it will not incur losses. The estimated smelting profit margin is expected to remain above 40% in 2024, despite a general decline in profitability across the industry [2][6]. - The mining segment is facing challenges, with a projected copper output decrease due to operational disruptions. However, the upcoming production from the second phase of the Mirador project is anticipated to significantly enhance the company's mining capacity [2][6].