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Yangtze Business Daily News● Yangtze Business Daily reporter Xu Yang

Western Mining (601168.SH), a western mineral resources giant, has delivered its best interim report in history.

Recently, Western Mining released its 2024 semi-annual report. In the first half of the year, its operating income was 24.977 billion yuan, a year-on-year increase of 10.11%; its net profit was 1.621 billion yuan, a year-on-year increase of 7.55%.

Western Mining said that the steady growth in performance was mainly due to the year-on-year increase in both output and price of its main product, copper concentrate.

In recent years, Western Mining's financial condition has improved significantly, and its debt-to-asset ratio has declined for five consecutive years, reaching 60.14% as of the end of June 2024.

The Yangtze Business Daily reporter noted that Western Mining is quite active in distributing dividends. Data shows that since its listing in 2007, the company has distributed a total of 8.341 billion yuan in cash dividends, accounting for 53.55% of its total distributable profits.

Rising copper prices boosted earnings

Western Mining has maintained strong profitability.

According to the latest semi-annual report for 2024, in the first half of this year, Western Mining achieved operating income of 24.977 billion yuan, a year-on-year increase of 10.11%; net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") was 1.621 billion yuan, a year-on-year increase of 7.55%; net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") was 1.676 billion yuan, a year-on-year increase of 12.61%. This performance is the best in the same period in history.

In the first quarter, Western Mining's operating income was 10.97 billion yuan, a year-on-year decrease of 5.18%; net profit was 737 million yuan, a year-on-year increase of 8.39%; non-net profit was 715 million yuan, a year-on-year increase of 6.66%.

According to this calculation, in the second quarter, Western Mining achieved operating income of 14.0 billion yuan, a year-on-year increase of 26.04%; net profit was 884 million yuan, a year-on-year increase of 6.87%; non-net profit was 960 million yuan, a year-on-year increase of 17.49%. By comparison, the performance in the second quarter increased both year-on-year and quarter-on-quarter.

Western Mining said that the main reason for the performance growth was that the output and price of copper concentrate increased by 42% and 13% respectively during the reporting period compared with the same period last year.

In terms of product output, the output of major mineral products of Western Mining has achieved a significant increase. At the same time, the company has also made significant progress in the field of salt lake chemicals, producing 58,900 tons of high-purity magnesium hydroxide, completing 58.92% of the first half of the year plan.

Western Mining landed on the A-share market in 2007. Since its listing, the company's operating performance has fluctuated many times. In 2018, the company's net profit loss was 2.059 billion yuan, which was the only loss since its listing. Since 2019, the company has achieved continuous profitability and its fundamentals have performed well overall.

From 2019 to 2023, the company's operating income was RMB 30.57 billion, RMB 28.67 billion, RMB 38.50 billion, RMB 40.24 billion and RMB 42.75 billion respectively; the net profit was RMB 1.007 billion, RMB 907 million, RMB 2.932 billion, RMB 3.417 billion and RMB 2.789 billion respectively.

R&D expenses increased by 22.68% in the first half of the year

As a mining company, metal mine development is the main business that supports the stable development of Western Mining in the long term. Western Mining wholly owns or controls 15 mines, including 6 non-ferrous metal mines, 8 iron and iron-polymetallic mines, and 1 salt lake mine. The company has 6.05 million tons of copper metal reserves, and its main mines are Yulong Copper Mine in Tibet and Huogeqi Copper Mine in Inner Mongolia.

At present, Western Mining is actively promoting capacity expansion. The semi-annual report mentioned that Yulong Copper has carried out the preliminary procedures for the 30 million ton capacity expansion project as planned, and has completed the preparation of nine reports including the "Phase III Project Development and Utilization Plan" and obtained review opinions. At the same time, the No. 2 iron ore open-pit conversion and expansion project of Inner Mongolia Shuangli Mining Co., Ltd. is also progressing steadily.

In addition to its resource advantages, Western Mining has also continued to carry out technological research and development, increased investment in scientific research, transformed and upgraded the level of mining and smelting process technology and equipment, and improved the level of automation and informatization. Indicators such as the comprehensive utilization rate of mining resources and the comprehensive energy consumption of smelting have entered the forefront, and mining and mineral processing technology are at the forefront of the industry.

From 2020 to 2023, Western Mining's R&D expenses were RMB 153 million, RMB 294 million, RMB 400 million and RMB 574 million, respectively, increasing year by year. The R&D expenses in the first half of 2024 increased by 22.68% year-on-year to RMB 298 million.

At the same time, the financial situation of Western Mining has gradually improved. The company's asset-liability ratio has dropped from 71.15% in 2018 to 60.93% in 2023, a cumulative decrease of 10.22 percentage points; as of the end of June 2024, the company's asset-liability ratio was 60.14%, which was stable and declining. The financial expenses in the first half of the year were 347 million yuan, a year-on-year decrease of 6.06%.

In terms of cash flow, since 2012, the net cash flow generated by Western Mining's operating activities has continued to be positive. In the first half of this year, it was 5.04 billion yuan, a year-on-year increase of 104.28%.

Based on good fundamentals and abundant cash flow, Western Mining returns "real money" to shareholders. Data shows that since its listing, the company has distributed a total of 8.341 billion yuan in cash dividends, accounting for 53.55% of the cumulative distributable profits, ranking at the forefront of the industry. In contrast, the company only raised 6.201 billion yuan in IPO funds when it went public in 2007, and has not conducted equity financing since then, with a cash dividend financing ratio of 134.51%.

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