Jiangxi Copper (600362): Holding FQM18.

015% shares overseas M & A first

Jiangxi Copper (600362): Holding FQM18.

015% shares overseas M & A first

Event: On December 9, 2019, Jiangxi Copper (Hong Kong) Investment Co., Ltd. (JCCI), a wholly-owned subsidiary of the company, and Pangaea Investment Management Ltd.

  (PIM) signed the Share Sale and Purchase Agreement, which agreed that JCCI transferred 100% equity of PIM Cupric Holdings Limited (PCH) held by PIM, and the consideration for the transfer of the underlying equity was 11.

$ 15.9 billion.

PCH currently holds First Quantum Minerals Ltd.

(FQM) 18.

015% shares, the company will become FQM’s single largest investor shareholder in the industry.

  Opinion: The acquisition of FMQ has taken a necessary step for the company’s overseas layout.

Absolutely, the company’s mineral copper output has shown a decreasing trend, and the company’s main profit source is copper concentrate. Therefore, the company urgently needs to expand its resource reserves and enhance its core competitiveness.

In the 2018 annual report, the company proposed the general idea of “main internal mergers and acquisitions in mergers and acquisitions” to promote overseas investment and mergers and acquisitions.

The acquisition of FQM is a major progress of the company’s overseas layout, which will help the company to move towards the internationalization of resources and will also supplement the company’s cash flow.

  FMQ reserves are abundant, and its three world-class mines have been put into production one after another.

FQM is a Canadian mining company listed on the Toronto Stock Exchange. Its main business is mining exploration and development.

FQM currently has 9 copper mine development projects in 8 countries including Zambia, Panama, and Peru. Among them, the Kansanshi copper mine in Zambia, the outpost copper mine and the Cobre Panama copper mine in Panama have been put into production.

The Cobre Panama copper mine was officially put into production in the second quarter of 2019. Commercial production began in September. The controllable amount of ore has been proven to be 1.8 billion tons, and the grade of the ore is copper 0.

51%, gold 0.

08g / t, copper metal amount 960 additive, gold 147.

42 tons.

According to the company’s announcement, FQM controls a total of approximately 4,925 calories of copper ore resources (Canadian NI 43-101 standard), of which the amount of equity copper resources is 4,590 euros.

FQM’s copper mine output in the third quarter of 2017, 2018 and 2019 was 57.

40 tons, 60.

59 early and 47.

57 budget.

According to the repeated production indicators of the FQM2018 annual report on February 15, 2019, the copper output in 2019-2021 is expected to be: 70-73.

5-digit, 84-87 budget, 82-digit.

  Copper prices are cautiously optimistic in 2020.

In 2020, the global supply and demand of refined copper may shift from overlap to excess, and the overall price trend of 杭州龙凤桑拿网 copper is under pressure.

However, the supply of refined copper has always been uncertain, and it is not ruled out that the supply may exceed expectations.

At the same time, as China is the world ‘s largest consumer of refined copper, since the second half of 2019, the continuous adjustment of the cycle has increased, and the Chinese economy may have bottomed in the short term, and the demand for China may exceed expectations.

  Earnings forecast and investment grade: We expect the company’s diluted returns from 2019-2021 to be 0.

77 yuan, 0.

97 yuan, 1.

06 yuan, calculated based on the closing price of 2019-12-12, corresponding PE is 20 times, 16 times, 14 times, maintaining the “overweight” level.