2024 results hit record high, in line with our expectations

Zijin Mining announced its 2024 results: In 2024, net profit attributable to shareholders surged 51.8% YoY, hitting a record high. Revenue rose 3.49% YoY to Rmb303.6bn, net profit attributable to shareholders grew 51.8% YoY to Rmb32.051bn, and recurring attributable net profit increased 46.6% YoY to Rmb31.69bn. In 4Q24, revenue rose 7.1% YoY and fell 8.4% QoQ to Rmb73.24bn, and net profit attributable to shareholders grew 55.3% YoY and fell 17% QoQ to Rmb7.69bn. The firm’s results were in line with expectations.

Trends to watch

Earnings hit a new high, driven by rising product sales volume and prices. Sales volume and prices of mine-produced copper increased, and gross profit rose 31% YoY to Rmb29.31bn. In 2024, the ASP of mine- produced copper rose 13.8% YoY to Rmb58,526/t, and its output grew 6.07% YoY to 1.07mnt, mainly driven by Cukaru Peki Copper and Gold Mine, Julong Copper Mine, Kamoa Copper Mine, and Yulong Copper Mine. Production cost fell 1.5% YoY to Rmb22,965/t.

Gross profit of mine-produced gold rose 61% YoY to Rmb19.67bn, due to rising sales volume and prices. In 2024, the ASP of mine-produced gold rose 29% YoY to Rmb520.6/g, and its output grew 7.7% YoY to 72.9t, mainly driven by Buriticá Gold Mine, Cukaru Peki Gold Mine, Aurora Gold Mine, Norton, Porgera Gold Mine, and Longnan Zijin, with production cost at Rmb231/g, up 3.4% YoY. Gross profit of mine-produced zinc rose 123% YoY to Rmb2.39bn, due to falling sales volume and rising prices. The ASP of mine-produced zinc rose 26% YoY to Rmb14,921/t, and its output fell 3.51% YoY to 407,077t, with production cost rising 5.73% YoY to Rmb8,735/t. Output of mine-produced silver exceeded production guidance, while the output of mine-produced gold, copper, zinc, and lead slightly missed guidance. In 2024, 104%, 99%, 96%, and 87% of the silver, gold, copper, and zinc & lead production plans were completed

Long-term copper and gold output set for systematic growth; firm accelerating its drive to rank among the world's top 3-5 miners. Over 2024-2028, we expect the firm’s output of mine-produced copper to grow at a CAGR of about 8%, and its output of mine-produced gold to grow at a CAGR of 8% with a systematic increase in copper and gold output.

Meanwhile, the firm's new five-year plan outlines its 2028 production　　targets. It aims at producing 1.5-1.6mnt of mine-produced copper and 100-110t of mine-produced gold. The firm also targets 550,000-600,000t of mine-produced lead and zinc, along with 600-700t of mine-produced silver.

Additionally, it plans to produce 250,000-300,000t of lithium carbonate and 25,000-35,000t of mine-produced molybdenum. We believe these targets imply significant growth potential from the current levels. The firm is accelerating the transformation of its resource advantages into production capacity and economic strength, advancing its goal of becoming one of the global top-three to five mining companies.

Financials and valuation

We maintain our 2025 and 2026 attributable net profit forecasts of Rmb39.1bn and Rmb41.1bn, as the firm’s long-term copper, gold, and lithium output is set to rise systematically. We maintain OUTPERFORM ratings for A- and H-shares. We maintain our target prices of Rmb23 (16x 2025e and 15x 2026e P/E) offering 30.9% upside for A-shares and HK$21.4 (14x 2025e and 13x 2026e P/E) offering 23.8% upside for H- shares. A-shares are trading at 12x 2025e and 11.3x 2026e P/E, and H- shares at 11x 2025e and 10x 2026e P/E.

Risks

Higher-than-expected new supply of copper and zinc mines; disappointing interest rate cuts by the US Federal Reserve; disappointing capacity expansion.