Luoyang Molybdenum (603993): Performance is slightly lower than expected, expecting to play multi-business synergies in the future

Luoyang Molybdenum (603993): Performance is slightly lower than expected, expecting to play multi-business synergies in the future

Performance summary: The company achieved operating income of 33.4 billion in the first three quarters of 2019, and will increase 66 in the future.

4%; realized net profit of return to mother 12.

4 ‰, an annual reduction of 79%; net profit attributable to mothers after exceeding non-recurring gains and losses.

7 trillion, a year-on-year decrease of 106%, and the net cash flow from operating activities was 14 trillion.

The performance was slightly lower than expected, and the net profit of Q3 after non-return to mothers dropped sharply.

The company’s Q3 single-quarter operating income was 23.4 billion, an increase of 17.9 billion quarter-on-quarter, mainly due to the company’s completion of the merger and acquisition of IMX, the world’s third largest trader, on July 24, 2019.In Q3, the net profit attributable to the mother for the single quarter was 4.

At 4 ppm, Q3’s net profit after deduction for the single quarter is 1.

700 million, a decrease of 3 from the previous quarter.

77 ppm, Q3 single quarter gross margin was 5.

5%, a decrease of 22 units from the previous quarter.

The decline in product sales has adversely affected the company’s performance.

The company’s main products are molybdenum, tungsten, ≤, phosphate fertilizer (high concentration + low concentration), copper (TFM), cobalt, copper (80% equity of NPM), and gold production and sales are -7% /-15% and -6% respectively./ 4%, 6% /-18%, -2% / 3%, 4% /-13%, -9% /-22%, -13% /-20%, -24% /-28%,The sales volume of the company’s main copper, cobalt and other products fell by more than 20%, which adversely affected the company’s profit. Looking at the chain, the sales volume of copper products fell by the same amount. At the same time, the Q3 Q3 LME copper price fell by 5%, but considering thatThe price of molybdenum metal rose by about 9% month-on-month, so product volume and price changes had limited impact on the company’s profit; the company’s Q3 single quarter tax and three fees increased by 1 billion month-on-month. In summary, we believe that it is the company’s internal cost adjustment and other factorsThe non-net profit deduction caused by Q3 dropped significantly.

Expand the industrial chain layout and 天津夜网 consolidate the control of superior assets.

In July 2019, the company completed the acquisition of 100% equity of IMX, the world’s third largest metal trader, which will help the company grasp the internal supply and demand relationship in the industry, realize the extension of the industrial chain, and produce synergistic effects.The acquisition of a 24% minority stake in the TFM project has enhanced the control and voice of the TFM project; in September 2019, the company took 32.

RMB 6.8 billion in successful bidding for sodium paratungstate2.

83 For the first time, at the same time as “commercial collection and storage” of tungsten raw material products, it is equivalent to increasing the company’s tungsten resource reserves.

Earnings forecasts and investment advice.

Considering that the company has multiple high-quality assets worldwide, we estimate that the company’s operating income for 2019-2021 will be 404 trillion, 421 trillion and 426 trillion, respectively, and the net profit attributable to the mother will be 16 respectively.

4 trillion, 20 trillion and 24 trillion, corresponding to 45 times, 37 times and 31 times the corresponding PE, maintaining the “buy” level.

Risk reminders: risks of price changes of cobalt, molybdenum, copper, new energy vehicle sales are less than expected, and overseas asset operation risks.