Luoyang Molybdenum (603993): Company performance returns to copper prices expected to rebound

Luoyang Molybdenum (603993): Company performance returns to copper prices expected to rebound

Event description: The company released its 2018 annual report and 2019 first quarter report.

In the ten years of 2018, it achieved revenue of 259.

6 ppm, a ten-year increase of 7.


Net profit attributable to mother is 46.

36 ppm, an annual 北京桑拿洗浴保健 increase of 70%, with a return of zero.

21 yuan / share.

Revenue in the first quarter of 2019 was 44.

78 ‰, a decrease of 39 per year.


Net profit attributable to mother is 3.

2 trillion, down 79 a year.


Event comment: In 2018, the prices of various sectors rose, and the main business income increased.

The company is mainly engaged in copper, molybdenum, tungsten, cobalt and other metals mining, smelting, deep processing and other businesses.

In 2018, the company achieved molybdenum metal production1.

54 Cobalt and tungsten metal production1.

17 initial.

TFM copper-cobalt ore achieves copper metal production16.

8 cobalt, cobalt metal production 1.


In 2018, the company’s main metal prices rose, and the average market prices of copper, cobalt, molybdenum, tungsten and tungsten rose.

杭州夜网42%, 35.

55%, 41.

80%, 18.

21% and 23%, the collective increase in metal prices has significantly improved the company’s performance.

During the period, expenses continued to decline, and the company’s operations gradually improved.

The company’s 2018 sales expenses, management expenses and financial expenses were 0.

9.7 billion, 9.

3.3 billion, 6.

43 trillion, a year-on-year reduction of 55%, 11.

7%, 54.


The decrease in selling expenses and administrative expenses was due to the decrease in market consulting fees compared with the same period of the previous year. According to the new income list, the relevant freight was included in the operating costs, and the research and development expenses were separately listed.

The decrease in financial expenses was due to the increase in interest income and exchange gains in the current period compared with the same period last year.

In the initial purchase season, copper prices are expected to rebound.

Described in detail in our in-depth report “Copper”: rebound in April, bottoming out at the end of the year.

With the economic stabilization in the second quarter of 2019, improved investment, a loose environment for monetary policy margins, and the peak season brought by the concentrated purchasing of copper itself from April to May, we believe that the price of copper will start a trending rebound and prices are expected to reachUS $ 7,000 / ton, driving the overall assessment and repair of the copper sector.The company has abundant copper resources and its capacity is gradually released, benefiting from the rebound in copper prices.

Profit forecast and investment suggestions: It is expected that the company’s net profit attributable to its parent from 2019 to 2020 will be 30.

32, 31.

79, 37.

04 ppm; EPS is 0.

14, 0.

15, 0.

17 yuan, with a daily corresponding P / E of 30X, 28 on April 30, 2019.

6X, 24.

6X, give “overweight” rating.

Risk reminder: Mining environmental protection and safety risks, short-term fluctuations in copper and cobalt prices