Investment Rating - The report assigns an "Outperform" rating for the company, with a reasonable valuation range of 15.41 to 18.49 CNY per share, indicating a potential upside of 47% to 77% from the current price of 10.24 CNY [5]. Core Insights - The company is a leading player in the domestic zinc smelting industry, with a comprehensive business model that includes mining, smelting, and sales of non-ferrous metals, particularly lead, zinc, gold, and silver [1][27]. - The company has a robust production capacity, with an annual output of over 40,000 tons of lead and zinc metals, along with 1.8 to 2 tons of gold and approximately 60 tons of silver [1][38]. - The company has recently completed a significant asset restructuring, acquiring core lead and zinc assets, which has enhanced its operational capabilities and resource base [16][47]. Summary by Sections Business Overview - The company primarily engages in the mining and smelting of lead, zinc, and precious metals, with nearly half of its gross profit derived from precious metals [1]. - It operates three mines and has a total mining capacity of 860,000 tons per year, with significant resources in lead, zinc, gold, and silver [2][32]. Financial Performance - The company forecasts a substantial increase in net profit, projecting 1.1 billion CNY for 2025, representing a 40% growth from the previous year [4]. - Revenue is expected to grow from 19.4 billion CNY in 2023 to 20.9 billion CNY in 2025, reflecting a compound annual growth rate (CAGR) of 6.1% [4][28]. Resource and Production Capacity - The company has a total lead and zinc metal resource of approximately 870,000 tons, with gold and silver resources of 43 tons and 1,259 tons, respectively [35]. - The mining rights include the Water Mouth Mountain lead-zinc mine and the Bafang copper mine, which contribute to the company's strong resource base [2][19]. Market Dynamics - The report highlights an improving market for zinc processing fees, with domestic zinc concentrate processing fees showing an upward trend, which is expected to enhance smelting profits [2]. - The company benefits from a favorable resource endowment, with high-grade ore and a well-structured supply chain that supports its production needs [32][35].

Core Viewpoint - Zhuzhou Smelter Group Co., Ltd. reported a strong performance in Q1 2025, with revenue of approximately 4.803 billion yuan, a year-on-year increase of 8.50%, and a net profit attributable to shareholders of approximately 283 million yuan, a year-on-year increase of 112.94% [2][3] Company Overview - Zhuzhou Smelter Group is a large state-owned enterprise primarily engaged in the smelting, processing, and sales of non-ferrous metals, particularly zinc and lead, and is a leading zinc smelting company in China [2] - The company has advanced wet and pyrometallurgical zinc smelting processes and has a high resource utilization rate by recovering precious metals from smelting waste [2] - The company produces zinc alloys and hot-dip galvanized alloys for applications in automotive, battery, and construction sectors, maintaining a leading market share in domestic zinc products [2] Performance Drivers - The increase in Q1 performance is attributed to high prices of precious metals, particularly gold, driven by factors such as interest rate expectations in developed economies, geopolitical risks, and industrial demand growth [3] - The company has enhanced its profitability through mining and sourcing raw materials for precious metal refining, significantly increasing unit value and profit contribution [3] - The acquisition of Shuikoushan Mine has transformed the resource base into a profit source, and the technical upgrade project at Kangjiabao Mine has further released advanced production capacity [3] Operational Efficiency - The company has focused on meticulous cost control and process optimization, effectively maintaining low impurity levels in products and reducing unit production costs through technical improvements in smelting electricity consumption [3][4] - The domestic zinc product market demand is robust, and the company has adjusted its production strategy to meet high-quality zinc ingot demand, achieving premium sales [4] - The combination of precious metal business growth, accelerated mining capacity release, and internal cost reduction efforts has significantly contributed to the company's performance growth [4]