Jiangxi Copper (600362) Company Review Report: Shares in the First Quantum Layout Overseas Resources
Event: Jiangxi Copper announced recently that Jiangxi Copper (Hong Kong) Investment Co., Ltd. (JCCI), a wholly-owned subsidiary of the company, intends to transfer the company’s indirect shareholding company, Pangaea Investment Management Ltd.
(PIM) holders of PIM Cupric Holdings Limited (PCH) 100% equity, trading price 11.
$ 15.9 billion.
PCH currently holds an 18% stake in First Quantum (FQM), a company listed on the Toronto Stock Exchange of Canada.
FQM owns 9 copper mine development projects in 8 countries including Zambia and Panama.
Through this transaction, the company will become the single largest investor shareholder of the same industry in FQM.
Investment points: The company has formed a two-pillar business structure with copper and gold as its mainstay.
The company’s business covers the mining and processing of gold and copper, smelting and processing, extraction and processing of precious metals and rare metals, sulfide, as well as finance and trade, and has established a set of exploration and mining in the field of copper and related non-ferrous metals.The complete industrial chain of beneficiation, smelting and processing is an important copper, gold, silver and sulfur production base in China.
Its products include: more than 50 varieties of halogen copper, gold, silver, sulfuric acid, copper rods, copper tubes, copper foil, selenium, tellurium, thorium, bismuth.
In terms of copper, there are currently six copper producing mines in China: Dexing Copper Mine (including Tongchang Mining Area, Fujiawu Mining Area, and Cinnabar Red Mining Area), Yongping Copper Mine, Chengmenshan Copper Mine (including Jinjiwo Silver Copper Mine), Wushan Copper Mine, Dongxiang Copper Mine and Yinshan Mining Company.
The company is China’s largest copper production base, the largest associated gold and silver production base, 杭州桑拿 and an important vulcanization base; it has the largest domestic Dexing copper mine and the largest copper smelter in the world. It is also the largest domestic copper smelter.Copper processing producer.
The company “Guiye brand” halogen copper was successfully registered in LME in 1996, and it is China’s first worldwide copper brand.
The annual production capacity of copper chloride in 2018 exceeded 140 tons.
In terms of gold, the company acquired Hengbang shares (stock code: 002237) in March 201929.
99% of the shares, became the controlling shareholder of Hengbang shares, and became the company’s gold business segment.
The exploration, mining, selection, smelting, and chemical production of Hengbang’s main military gold are key national gold smelting enterprises.
It has an annual output of 50 tons of gold and 700杭州夜网论坛 tons of silver, and a capacity of 100 by-products of sulfuric acid in the smelting process.
The company’s “three-year innovation doubling plan” strategy has accelerated.
In 2018, the company proposed to seek breakthroughs in various aspects such as strategic investment and reform of the system and mechanism in order to accelerate transformation and upgrading, and strive to double sales revenue by 2021 and double its retained resource reserves, becoming the world’s largest copper smelter and copper processing enterprise.
In 2019, the company accelerated the pace of expansion to implement the strategy. In January 2019, it acquired 65% equity of Guoxing Copper; in March 2019, it acquired the listed company Hengbang 29.
99% equity; In April 2019, it changed the ownership transfer agreement with Jetta Su Tungsten in Kazakhstan to jointly develop a large-scale open-pit tungsten mine in Bakutat; In December 2019, it took a stake in First Quantum.
At the same time, Wushan, Chengmenshan, Yinshan and other mines will be reconstructed and expanded to deepen the potential of alternative mines.
Become the single largest shareholder of First Quantum and deploy overseas mineral resources.
First Quantum (FQM) owns 9 copper mine development projects in 8 countries including Zambia, Panama, Peru. Among them, First Quantum (FQM) owns three world-class mines that have been put into operation in Zambia and Panama, and in Argentina and Peru.Owns two mines to be developed.
First Quantum (FQM) controls a total of approximately 4,925 millimeters of copper (Canadian NI 43-101 standard), of which the amount of copper resources attributable to FQM equity is 4,590 millimeters.
In addition, First Quantum (FQM) in Australia, Zambia also has two large nickel ore resources, with a total resource of 238 euros (Canada NI 43-101 standard).
FQM’s actual copper output in 2018 was about 60.
According to the output indicators displayed by First Quantum (FQM) on June 30, 2019, First Quantum (FQM) estimates that the copper output in 2019-2021 will be: 70-73.
5 leads, 84-87 leads, 82 leads.
The copper deposits controlled by First Quantum (FQM) are expected to generate more cash flow in the future.
The consideration for this transaction is 11.
US $ 15.9 billion, equivalent to about US $ 135 / tonne per unit of copper resource, the price is relatively reasonable.
The company’s output remains relatively stable.
The main product output in the first half of 2019 is: halogen copper 74.
93 for the first time, growing by 3 per year.
51%; copper concentrate contains copper 10.
2In the beginning, it increased by 0 every year.
2%; gold 12.
88 tons, a reduction of 0 every year.
17%; silver 169.
01 tons, a reduction of 8 per year.
13%; the equivalent volume of molybdenum concentrate (45%) is 3,917 tons, increasing by 4 year by year.
82%; sulfuric acid 207.
86 for the first time, with an annual increase of 0.
03%; sulfur concentrate 129.
In 1996, the annual growth rate was 8.
03%; production of copper rod 46.
41 At least, a decrease of 1 per year.
85%; other copper processed products except copper rods6.
28, at least 23 per year.
There are favorable conditions for the price of copper.
In 2019, the downward pressure on the economies of major global countries continues to increase, and internal and external uncertainties have increased significantly. The market situation of copper products has fluctuated downward, and downstream demand for copper products has been weak.
Upstream copper ore supply is in a tight state. Chile’s domestic turmoil may cause global copper ore supply to continue to be tight in 2020; domestic copper demand is relatively weak, and refining costs (TC / RC) are low, which may cause some smelting capacity to be cleared.Refined copper inventory is at a historically high level, and conditions for the price of copper prices to gradually rise have gradually formed, and the improvement in the margin of demand may bring about a rise in copper prices.
Investment advice and profit forecast: It is expected that the company’s fully diluted EPS for 2019-2021 will be 0.
78 yuan, 0.
82 yuan and 1.
02 yuan, according to the closing price of 15 on December 10.
Calculated at 09 yuan, the corresponding PE is 19 respectively.
4 times, 18.
4 times and 14.
8 times, considering that the company actively accelerates the implementation of its strategy, and plans to lay out overseas copper resources. The estimate is relatively reasonable, and the company was given an “overweight” investment rating for the first time.
Risk reminders: (1) Macroeconomic downturn; (2) The company’s domestic and overseas projects output is less than expected