HBIS Resources (000923) 华福证券·2024-06-06 01:30Investment Rating - The report initiates coverage with a "Buy" rating for the company [5][6]. Core Views - The company has a significant cost advantage in its magnetite business, with improved external conditions and transportation capabilities. The South African power crisis is easing, allowing for normal iron ore shipments in the second half of 2023. The company is enhancing cooperation with South African rail companies to improve transport capacity and loading efficiency, which may alleviate transportation bottlenecks in the future [1][4]. Summary by Sections Company Overview - The company, Hebei Steel Resources, has successfully transformed its business focus to mineral resources, particularly in iron and copper mining, after divesting its engineering machinery segment. It is now a major player in the South African mining sector, controlling high-quality mineral resources [18][20][24]. Iron Ore Industry - The iron ore market is characterized by strong supply and weak demand dynamics. Domestic efforts to increase self-sufficiency in iron ore are ongoing, while overseas supply remains stable. The overall supply of iron ore in China is expected to be ample, with steel production stabilizing [2][57]. Price Outlook - The report suggests that if favorable policies and major projects are realized, there could be a rebound in iron ore prices. The demand for iron ore is expected to remain stable, but the recovery may be slow in the spring of 2024 due to high port inventories [2][5]. Financial Forecast and Investment Recommendations - The company is projected to achieve net profits of 1.12 billion, 1.20 billion, and 1.33 billion yuan for the years 2024 to 2026, respectively. The earnings per share (EPS) are expected to be 1.72, 1.83, and 2.04 yuan per share for the same period. The report compares the company with peers in the iron ore and copper sectors, indicating a favorable valuation outlook [5][6][34]. Business Segments - The magnetite business is currently the core segment, contributing significantly to revenue and profit margins. In 2023, the company reported revenues of 5.87 billion yuan, a year-on-year increase of 16.1%, with net profits of 912 million yuan, up 36.95% [34][38]. The copper business is also expected to contribute positively, with the second phase of the copper project set to commence partial production by the end of 2024 [4][5].