JINHUIINC.(603132) Hua Yuan Zheng Quan·2024-11-10 13:52Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage in the sector [3][4][6]. Core Views - The company is positioned as a regional leader in lead and zinc mining, with a robust employee stock ownership plan that supports high-quality development. The company has shown steady growth in revenue and gross profit as production capacity increases [3][11]. - The integration of the Jianglu mining area is expected to significantly enhance both production capacity and performance, with an anticipated increase of 150,000 tons per year in lead and zinc output post-integration [4][6]. - The report highlights a favorable market environment due to a reduction in supply from lead and zinc mines, leading to rising prices and expanding profitability for mining companies [4][6]. Summary by Sections 1. Company Overview - The company operates primarily in lead and zinc mining, with a total lead and zinc reserve of 2.41 million metal tons as of June 2024, and an annual mining capacity of 1.78 million tons [3][23]. - The company has increased its mining and processing capacity significantly since its IPO, with mining capacity up by 280,000 tons per year and processing capacity up by 330,000 tons per year [3][23]. 2. Financial Performance - The company reported a revenue of 1.28 billion RMB in 2023, with a projected increase to 1.45 billion RMB in 2024, reflecting a year-on-year growth rate of 13.02% [5][6]. - The net profit attributable to the parent company is expected to reach 498 million RMB in 2024, with a corresponding PE ratio of 24X [4][6]. 3. Market Dynamics - The report notes a significant contraction in the supply of lead and zinc, with refined lead and zinc prices on the rise, contributing to a favorable profit outlook for the company [4][6]. - The company is expected to benefit from a decrease in processing costs, which could further enhance profitability [4][6]. 4. Future Projections - The company anticipates a net profit of 4.98 billion RMB in 2024, increasing to 9.34 billion RMB by 2026, with corresponding PE ratios of 24X, 17X, and 13X respectively [4][6]. - The integration of the Jianglu mining area is projected to add significant production capacity and profitability, with potential net profits estimated at 6.74 billion RMB under favorable market conditions [4][6].