Huayu Mining (601020) Interim 北京夜网 Review: Strategic Layout Precious Metals Performance Evaluation or Double Enhancement

Core point of view: the performance of the main product price is lower and the return on performance According to the company’s semi-annual report, the company achieved operating income in the first half of 20192.

34 trillion, net profit attributable to mothers is 39.06 million yuan, a decrease of 66 per year.

7%.

The expectation of excellent performance is that the prices of lead, zinc, and antimony metal in the first half of the year have decreased from the same period last year.

In addition, the inventory at the beginning of the first half of the year was less than that of the same period, and the short production cycle led to a decrease in production and sales volume and a decline in performance.

High-quality mines have a stable foundation, overseas projects have steadily advanced the company’s main domestic mine, Tashikang Polymetallic Mine, which has strong profitability, and can maintain high gross profit even if metal prices are low.

Now it has a 70-inch mining capacity and a 2,800 ton / day beneficiation capacity.

Overseas tower gold projects are steadily advancing, and gold production is about to be released.

According to reports, in the beginning of 2020, the annual capacity of 150 tons of ore processed by Talu Gold will be put into production, and the annual designed capacity will be gold concentrate2.

2 metal tons, antimony concentrate 1.

60,000 metal tons.

In addition, the recently acquired Ethiopian Tigray Resources Company holds 70% of the shares and has a gold reserve of 9.

5 metal tons, which will further increase the company’s gold output as the project progresses.

The investment proposal is based on the average price of gold, silver, antimony, zinc, and lead since the beginning of the year. The company’s EPS is expected to be 0 in 2019-2021.

23/0.

64/0.

80 yuan, corresponding to the current expected PE of 42/15/12 times, considering that the company’s internal business profit is bottoming out; Talc Gold is expected to increase its revenue by 78% after its production and the company’s profit is expected to increase by 178%; 2020The annual precious metal segment revenue accounts for nearly 50% of the total revenue (without considering price increases), or it will bring double improvement in performance and conversion.

The average PB of similar companies in the reference industry is 4.

1 time, the company is in the process of transformation to 3 times PB, the reasonable value is 11.

98 yuan.

It is expected that Huayu Mining’s performance assessment for 2020 will be improved by leaps and bounds, with 15 times PE and far lower than comparable companies on average 35 times. Maintain “Buy” rating.

Risks suggest that the trade war continues to worsen; Talc’s gold projects are put into production less than expected; precious metals prices fluctuate sharply.