Zijin Mining Copper and Gold output improvement performance greatly increased compared with the same period last year [Agency Review]

Event: on January 17, 2022, the company announced a pre-increase in 2021 performance. In 2021, the company is expected to achieve a net profit of about 15.6 billion yuan, an increase of about 9.091 billion yuan over the same period last year, an increase of about 139.67% over the same period last year. It is estimated that the net profit of deducting non-return is about 14.5 billion yuan, an increase of 8.178 billion yuan over the same period last year and an increase of about 129.36% over the From a quarterly point of view, 2021Q4, the company expects to achieve a net profit of about 4.298 billion yuan, an increase of 122.0% over the same period last year, a decrease of 7.6%; and an estimated deduction of 4.011 billion yuan for non-return net profit, an increase of 142.2% over the same period last year and a decrease of 8.4% from the same period last year. The results exceeded wind's consensus expectations and slightly below our expectations.

The year-on-year increase in performance in 2021 is mainly due to the simultaneous increase in the volume and price of copper, silver, zinc (lead) and iron concentrate and the year-on-year increase in mineral gold production. In 2021, the prices of copper, silver, lead, zinc and iron concentrate increased by 40.19%, 11.21%, 4.34%, 22.93% and 47.96% respectively compared with the same period last year. The company's output of mineral copper, gold, silver, zinc (lead) and iron concentrate increased by 28.92%, 17.28%, 3.34%, 14.81% and 9.71% respectively compared with the same period last year. The company's gold output in 2021 was 47.5 tons, and the output only reached 85% of the planned value (53-56 tons) in 2021, which was lower than expected, or lower than expected due to the failure of Guyana Jintian, mainland gold and Bogera to resume production. This is the main reason why the performance is lower than we expected. In addition, the Camoa copper mine sales are affected by the epidemic and logistics, the company's consolidated statements do not fully reflect the Kamoa copper mine's production and profits.

The company announced production guidelines for 2022, reducing the output of mineral gold and increasing the output of mineral copper. The company's 2022 production plan is: mineral gold 60 tons, mineral copper 860000 tons, mineral zinc (lead) 480000 tons, mineral silver 310 tons, iron concentrate 3.2 million tons, year-on-year output changes of + 26.32%, + 47.26%, + 10.6%, + 0.32%,-4.19%, copper and gold production increased significantly compared with the same period last year. Compared with the production plan made in January 2021, mineral gold decreased by 7 tons compared with the lower limit of 67-74 tons originally planned, while mineral copper increased by 10, 000 tons compared with the upper limit of 80-850000 tons planned, and the rest of the products were in line with the previously planned scope. The decline in mineral gold production is mainly due to the slower-than-expected construction of gold fields in Guyana and mainland gold, and the slow resumption of production at the Pogera gold mine; the increase in mineral copper production is mainly due to the timely commissioning and higher-than-expected production contribution of the three world-class copper mines (Timok, Kakulacamoa, Dragon).

A number of projects of the company will contribute to the increase in production in 2022. Copper plate, the three world-class copper mines will all contribute large increments in 2022. According to our estimates, under the assumption of 65000 yuan / ton copper price (including tax), Kamoakakula, Timok and Julong Copper Mine may contribute 2.53 billion yuan, 7.47 billion yuan and 1.65 billion yuan respectively to their mother's net profit in 2022. Gold plate, multi-project technical transformation is expected to increase the annual gold output of 12 tons, complete the annual production capacity planning. In addition, the company acquires Lithium Salt Lake to enter the field of new energy metals and looks forward to putting the project into production.

Profit forecast and investment advice: the company is ushering in the Davis double-click of performance, the output guidance of the main products copper, gold, zinc and lead in 2022 has greatly improved compared with this year's output, and the superimposed copper and gold price is expected to remain high. We continue to be optimistic about the company's alpha logic. Due to the lower forecast of gold production, we adjust our profit forecast for the company. It is expected that the company will achieve a net profit of 15.6 billion yuan, 25.4 billion yuan and 26.8 billion yuan from 2021 to 2023, and the PE corresponding to the closing price on January 17 will be 16x, 10x and 9x, maintaining the "recommended" rating.

Risk tips: project schedule is not as expected, copper and gold prices fall, geopolitical risks and so on.