China / Hong Kong Company Guide China Molybdenum Co Ltd
Version 1 | Bloomberg: 3993 HK Equity | 603993 CH Equity | Reuters: 3993.HK | 603993.SS Refer to important disclosures at the end of this report
DBS Group Research . Equity 1 Aug 2019
H: HOLD(Re-instating coverage) Stabilising cobalt market outlook Last Traded Price (H) ( 31 Jul 2019):HK$2.26(HSI : 27,778) Reinstate HOLD with TP of HK$2.6. Cobalt prices have started to Price Target 12-mth (H):HK$2.60 (15.0% upside) stabilise at 2016 low level on the back of reported decline 15% YTD (c.840 tonnes end-Jul) in cobalt inventory. We expect cobalt supply (Re-instating coverage) A: HOLD to slow due to stricter illegal mining regulation in the Democratic Last Traded Price (A) ( 31 Jul 2019):RMB3.62(CSI300 Index : 3,835) Republic of the Congo (“DRC”) and copper concentrate market Price Target 12-mth (A):RMB3.70 (2.2% upside) supply to turn tight. At our stable cobalt and copper price outlook of Analyst US$12/US$13 per lb and US$5,800/US$6,000 per tonne for 2019/ Duncan CHAN+852 36684178 [email protected] 2020 respectively, we expect China Molybdenum (“CMoC”) will What’s New maintain stable profit margins towards 2020. Despite CMoC’s share • Stabilising cobalt price outlook price has fallen to its pre-acquisition of Tenke Fungurume Mining (“TFM”) level, current valuation is not attractive; reinstating HOLD. • Battery supply chain restock and stricter illegal Where we differ: Despite new nickel cobalt manganese (“NCM”) mining regulation to drive inventory drawdown technology reduces the use of cobalt per unit of battery production, • Penetration of NCM materials in China support cobalt we believe growing market penetration of NCM materials from 46% consumption in midterm in 2018 to 51% in 2020, remains supportive for cobalt consumption. Meanwhile, we expect China’s new energy vehicle • Reinstate HOLD with TP of HK$2.6 (“NEV”) penetration rate to reach 6.6% by 2020 from 4.5% in 2018
Price Relative under the government’s development plan. Thus, we foresee cobalt consumption would continue to grow at high single digit in 2019 and 2020. It would keep cobalt market to stay balance in midterm. Raising stake in Tenke (cobalt) mine to 80% from 56% and to acquire the world’s third largest metal trading arm IXM. CMoC had proven track record in M&As (acquired TFM in 2016) to ride on the subsequent cobalt price rally. As such, the increase in stake could be another catalyst for a re-rating.
Valuation: Forecasts and Valuation (H Shares) FY Dec (RMBm) 2017A 2018A 2019F 2020F CMoC is currently trading at below -1.5SD of its 3-year historical Turnover 24,148 25,963 19,236 19,827 mean at 1.1x FY19F P/BV. Considering CMoC’s earnings outlook EBITDA 11,437 11,594 8,196 8,416 remains largely stable, we believe CMoC is fairly traded at current Pre-tax Profit 5,382 6,990 3,529 3,800 Net Profit 2,728 4,636 2,080 2,240 valuation. Our TP of HK$2.6ps represents 1.2x FY19F P/BV. Our Net Profit Gth (Pre-ex) 173.3 69.9 (55.1) 7.7 target valuation for A-shares is RMB3.7, based on 2.0x P/BV. (%)EPS (RMB) 0.14 0.21 0.10 0.10 EPS (HK$) 0.16 0.24 0.11 0.12 Key Risks to Our View: EPS Gth (%) 142.3 49.9 (55.1) 7.7 Commodity price risks and geo-political risks.
Diluted EPS (HK$) 0.16 0.24 0.11 0.12 At A Glance DPS (HK$) 0.10 0.13 0.05 0.05 Issued Capital - H shares (m shs) 3,933 BV Per Share (HK$) 2.28 2.16 2.11 2.05 PE (X) 13.9 9.3 20.6 19.2 - Non H shrs (m shs) 17,666 P/Cash Flow (X) 4.5 4.6 5.0 7.6 H shs as a % of Total 18 P/Free CF (X) 10.5 9.4 nm 16.1 Total Mkt Cap (HK$m/US$m) 80,116 / 10,240 EV/EBITDA (X) 3.7 4.3 6.6 6.5 Major Shareholders (%) Net Div Yield (%) 4.3 5.5 2.2 2.3 Cathay Fortune Corp. 30.2 P/Book Value (X) 1.0 1.0 1.1 1.1 Luoyang Mining Group Co., Ltd. 30.2 Net Debt/Equity (X) CASH CASH 0.0 CASH Beixin Ruifeng Fund Management Co., Ltd. 5.4 ROAE(%) 9.6 11.7 5.1 5.7 Major H Shareholders (As % of H shares) 0 Cathay Fortune Corp. 7.7 Earnings Rev (%): New New GIC Private Limited 7.0 Consensus EPS (RMB) 0.11 0.13 H Shares-Free Float (%) 85.3 Other Broker Recs: B: 4 S: 4 H: 4 3m Avg. Daily Val. (US$m) 8.52 Source of all data on this page: Company, DBS Bank (Hong Kong) Limited ICB Industry: Basic Materials / Mining (“DBS HK”), Thomson Reuters Bloomberg ESG disclosure score (2017)^ 40.9 - Environmental / Social / Governance 41.9 / 33.3 / 46.4 ^ refer to back page for more information
ed-TH / sa- CS /DL
Company Guide
China Molybdenum Co Ltd
WHAT’S NEW would be the beneficiary as its cobaltous hydroxide output is Stabilising cobalt market outlook mainly sold to refineries overseas and volumes are basically locked in as per contract terms.
Stabilising cobalt price outlook. Cobalt prices have started to Copper: Tight supply of copper to support price. Low copper stabilise at 2016 low level on the back of reported decline prices in 2015-16 led to a collapse in investments in the 15% YTD (c.840tonnes end-Jul) in cobalt inventory at sector. While it usually takes three years to ramp up capacity warehouses, as the battery supply chain to restock. We at a new copper mine, supply has tightened since 2017. expect cobalt supply to slow due to stricter illegal mining Chile, the world’s largest copper producer representing 27% regulation in the DRC and copper concentrate market supply of the world’s output, saw its production sliding by 7.1% y-o- to turn tight. At our stable cobalt price outlook of y for the first quarter of 2019. The 2019 China copper TC US$12/US$13 per lb for 2019/ 2020 respectively, we expect (treating charge) has declined by 32%, hitting a five-year low, CMoC will maintain stable margins towards 2020. suggesting lower availability of copper concentrates. So far in
2019, we have seen the prolonged stoppage of production at Riding on cobalt consumption rebound and the deployment mines in Chile due to persistent union strikes. This could of NCM materials. China’s NEV output for the first six months further escalate supply uncertainty. Besides, China’s expected of 2019 surged by 48% y-o-y to 614,000 units. According to ban on scrap copper imports (for Category scrap #6 plus #7) China Association of Automobile Manufacturers, China could affect c.15% of the country’s raw material supply. production of electric vehicles, at their latest forecast of Meanwhile, we maintain our copper price assumption at 1.5mn units for 2019, representing an increase by 18%, and US$5,800/US$6,000 per tonne for 2019/2020. China’s electric vehicle penetration rate up to an estimated of
5.7% in 2019 and 6.6% in 2020. According to Adamas Hoping good acquisition performance to repeat. CMoC had Intelligence, 6.7GWh of NCM battery capacity was deployed proven track record in M&As, acquiring Tenke Fungurume globally in newly sold passenger BEVs, PHEVs and HEVs, up Mining (“TFM”) in 2016 to ride on the subsequent cobalt 69% on year, citing that the battery supply chain restocking. price rally. Meanwhile, CMoC increased its stake in TFM, the In China, we noticed that the market share of NMC ternary copper-cobalt mine in southeast of the DRC, to 80% from material in NEV batteries had increased to 46% in 2018, 56%, as pre-alerted since April 2017. The deal indicates the versus 38% in 2017. This is thus is supportive of cobalt company’s confidence in the future of the cobalt market. demand. Moreover, CMoC also announced in December 2018 its
acquisition of a 100% stake in a Swiss mineral trader IXM Beneficiary of acceleration replacement demand for 5G (formerly known as Louis Dreyfus, which is the world’s third smartphone in China. In China, the Ministry of Industry and largest after Glencore and Trafigura, and specialises in the Information Technology is starting to issue 5G licenses, along trading of metals. This could enable the company to acquire with the coverage of signal networks ahead. Meanwhile, the first-hand market information and strengthen the company’s battery capacity required to satisfy the expanding phone sales channels. We have not factored in this deal in our market is increasing into the second half of the year. We earnings projection. believe that replacement needs for the smartphone segment
and the derived demand in other consumer products, namely Reinstating HOLD with TP of HK$2.6. CMoC’s 1Q19 results laptop and mobile power supplies, would drive the demand was badly hit by the fall in cobalt prices. In anticipation of for batteries. This would support demand for lithium cobalt stable cobalt price outlook, we expect CMoC’s earnings to oxide as well as NCM ternary material, which is estimated to maintain stable margins towards 2020. Despite CMoC’s share expand this segment’s share of total battery market to low price has fallen to its pre-acquisition of TFM level, current double digits level from c.9% in 2018. valuation remains not attractive. CMoC is currently trading at
1.1x FY19F P/BV, below the historical mean of 1.8x and at its Cobalt: Potential catalyst from supply disruption in DRC. DRC 3-year historical low. We pegged our target price multiple at produces more than two-thirds of the world’s supply of 1.2x P/BV, representing -1.5SD of its historical mean, cobalt. Early this month, it had reported the mine incident reflecting a largely stable outlook. Our target price for operated by Katanga, a subsidiary of Glencore in the DRC CMoC–A is Rmb3.7 based on 2.0x P/BV; reinstate HOLD. with at least 19 illegal miners were killed. Moreover, according to Financial Times reports, the DRC government is looking to regulate small-scale mines and informal mining activities following severe occupational injuries reported. These mines account for nearly one-fifth of the country’s cobalt production. Their output is mostly in the form of raw materials that are supplied to Chinese refineries. CMoC
Page 2
Company Guide
China Molybdenum Co Ltd
INVESTMENT THESIS: China Molybdenum
Profile Rationale Global cobalt/copper miner. China Molybdenum Co Ltd Reinstate HOLD with TP of HK$2.6. Cobalt prices have started (“CMoC”) is a global diversified mining production company to stabilise at 2016 low level on the back of reported decline which is the world’s second largest producer of cobalt, the 15% YTD (c.840 tonnes end-Jul) in cobalt inventory at fifth largest producer of molybdenum, and one of the warehouses. We expect cobalt supply to slow due to stricter leading copper producers. illegal mining regulation in the Democratic Republic of the Congo (“DRC”) and copper concentrate market to turn tight. At our stable cobalt and copper price outlook of US$12/US$13 per lb and US$5,800/US$6,000 per tonne for 2019/ 2020 respectively, we expect CMoC will maintain stable margins towards 2020. Despite CMoC’s share price has fallen to its pre-acquisition of Tenke Fungurume Mine (“TFM”) level, current valuation remains not attractive. Hence, we are reinstating HOLD.
China’s leading diversified mining company with proven acquisition growth track record. China Moly acquired TFM on 15 May 2016, as to ride on the cobalt market upcycle, the acquisition was completed in November 2016.
Beneficiary of the stabilising cobalt market outlook. We foresee cobalt metals consumption continue to grow at high single digit in 2019 and 2020: (1) China’s new energy vehicle (“NEV”) output is on track to meet the government’s target, with NEV penetration rate to estimated 6.6% by 2020 from 4.5% in 2018, and (2) the smartphone replacement needs for China 5G development. Despite new nickel cobalt manganese (“NCM”) technology reduces the use of cobalt per unit of battery production, we believe growing market penetration of NCM materials from 46% in 2018 to 51% in 2020, is supportive for cobalt consumption in midterm.
Potential M&As drivers. Raising stake in Tenke (cobalt) mine to 80% from 56%. With the management’s outstanding timing in seeking acquisition targets, the increase in stake could be another catalyst for a re-rating. Moreover, acquisition of the world’s third largest metal trading arm IXM, formerly known as Louis Dreyfus, which is the world’s third largest after Glencore and Trafigura and specialises in the trading of metals. We have not factored in this deal in our earnings projection.
Valuation Risks CMoC’s 1Q19 results was badly hit by the fall in cobalt prices. Commodity price risks. The company’s earnings are most In anticipation of stable cobalt price outlook, we expect sensitive to changes in copper and cobalt prices. CMoC’s earnings to maintain stable margins towards 2020. Geo-political and forex risks. CMoC reported forex losses in Despite CMoC’s share price has fallen to its pre-acquisition of 2017 mainly due to a significant depreciation of Congolese TFM level, current valuation remains not attractive. CMoC is franc against the US dollar, on the back of the economic currently trading at 1.1x FY19F P/BV, below the historical slowdown and political upheaval in DRC. mean of 1.8x and at its 3-year historical low. We pegged our
target price multiple at 1.2x P/BV, representing -1.5SD of its historical mean, reflecting a largely stable outlook. Our target price for CMoC–A is Rmb3.7 based on 2.0x P/BV. Source: DBS HK
Page 3
Company Guide
China Molybdenum Co Ltd
Revenue breakdown, FY19F Gross profit breakdown, FY19F
Source: DBS HK Source: DBS HK
SWOT Analysis
Strengths Weakness • Strong position in China mining sector and has a unique • Mining asset investments are in regions with geopolitical and scarce product portfolio globally across different uncertainty. For example, the DRC government business cycle promulgated its revised Mining Code in 2018 • Second largest cobalt producer and the leading copper • NOT hedging against the fluctuation risk of cobalt and producer in the world. Substantial reserves of copper, copper prices cobalt, molybdenum and tungsten • All the mines (except for Northparkes Copper/Gold Mine) exploited are open-pit mining, rich by-product scheelite out of production, high-efficient recovery and comprehensive utilisation technology with strong cost advantage
Opportunities Threats • Rising cobalt and copper demand from rapid electric • Slowing macroeconomic conditions dampen supply- vehicle growth demand dynamics as well as prices of metals • Inorganic growth through acquisitions. The company is • Potential geopolitical uncertainties in countries where its always eyeing new assets to grow inorganically with a mines are located. view of gaining sustainable competitive advantages
Source: DBS HK
Page 4
Company Guide
China Molybdenum Co Ltd
Cobalt Industry: supply and demand overview
2015 2016 2017 2018 2019F 2020F Supply Primary cobalt 9.6 9.4 10.1 11.1 12.2 13.4 Recycled cobalt 0.2 1.3 1.2 1.3 1.4 1.4 Total 9.8 10.6 11.3 12.5 13.6 14.8 % Y-o-Y 8.6% 6.5% 10.1% 9.2% 8.7% Demand 3C battery 5.5 5.7 6.2 6.3 6.3 6.3 Power battery 0.7 0.9 1.3 1.8 2.3 3.3 Superalloys 1.4 1.4 1.6 2.0 2.1 2.2 Cemented carbide 0.6 0.7 0.8 0.9 0.9 1.0 Magnets 0.7 0.7 0.8 0.9 0.9 0.9 Others 0.9 0.9 1.0 1.0 1.1 1.1 Total 10.0 10.4 11.6 12.7 13.6 14.8 % Y-o-Y 4.3% 11.3% 10.1% 6.9% 8.8% Balance -0.2 0.3 -0.2 -0.3 0.0 0.0
Source: DBS HK
Cobalt supply breakdown, 2018 Cobalt demand breakdown, 2018
Source: DBS HK Source: DBS HK
Page 5
Company Guide
China Molybdenum Co Ltd
Cobalt Industry: cobalt stock and 3M price Comments
Jan-Jul 2019 LME cobalt prices had stabilised at US$/tonne tonnes US$26,000/tonne, versus US$69,750/tonne a year ago, 100,000 1,100 US$56,928/tonne in 4Q18, US$34,849/tonne in 1Q19, and 90,000 1,000 80,000 900 US$32,346/tonne in 2Q19. Cobalt inventory reported at LME 70,000 800 warehouses has declined by 15% since Mar19. 60,000 700 600 50,000 500 40,000 400 30,000 300 20,000 200 10,000 100
0 0
Jul-18
Jul-19
Jan-18
Jan-19
Sep-18
Nov-18
Mar-18
Mar-19
May-18 May-19 Cobalt stock (RHS) LME-3M (LHS)
Source: Bloomberg Finance L.P.
Copper Industry: copper stock and 3M price Comments
Copper inventory reported at LME warehouses rebounded US$/tonne tonnes since Mar19 low level. Jan-Jul 201, dragging on copper prices. 7,500 450,000 LME 3M copper prices had traded down to US$5,963/tonne, 7,300 400,000 versus US$6,300/tonne a year ago, US$6,152/tonne in 4Q18, 7,100 350,000 US$6,218/tonne in 1Q19, and US$6,138/tonne in 2Q19. 6,900 300,000 6,700 250,000 6,500 200,000 6,300 6,100 150,000 5,900 100,000 5,700 50,000
5,500 0
Jul-18
Jul-19
Jan-18
Jan-19
Sep-18
Nov-18
Mar-18
Mar-19
May-18 May-19 Copper stock (RHS) LME-3M (LHS) Source: Bloomberg Finance L.P.
Page 6
Company Guide
China Molybdenum Co Ltd
China’s electric vehicle penetration rate in, 2011-2020 China Cobalt Industry: Penetration of ternary cathode materials (NCM) in new energy vehicle batteries
7.0% 6.6% 100% 6.0% 5.7% 80% 5.0% 60% 4.5% 4.0% 40% 3.0% 2.7% 20% 2.0% 1.8% 1.4% 0% 1.0% 2016 2017 2018 2019F 2020F 0.1% 0.0%0.1% 0.3% LCO (钴酸锂） 0.0% LMO (锰酸锂）
LFP (磷酸铁锂）
2011
2012
2013
2014
2015
2016
2017
2018 2019F 2020F Ternary material NCM (三元材料）
Source: DBS HK Source: SMM, DBS HK
Comparison of subsidies for new energy passenger vehicles, 2017-2019
Pure electric driving range, Vehicle type R Subsidy amount (RMB '000) 2017 2018 2019 Pure electric passenger car 100≤R<150 20 / / 150≤R<200 36 15 / 200≤R<250 24 / 250≤R<300 44 34 18 300≤R<400 45 18 R≥400 50 25 Plug-in hybrid passenger car R≥50 24 22 10 Note: #1 Pure electric passenger car per unit subsidy amount = min (mileage subsidy standard, vehicle power consumption xRMB550) x battery system energy density adjustment factor x vehicle energy consumption adjustment number #2 Subsidy program for new energy passenger cars that are not privately purchased or used for operation, in accordance with 0.7x the corresponding subsidy amount Source: DBS HK
Page 7
Company Guide
China Molybdenum Co Ltd
Proforma revenue breakdown, FY18A Proforma gross profit breakdown, FY18A
Phosphorus Phosphate, 3.4% 2.1% Niobium 2.3% Niobium, 7.2%
Cobalt 6.3% IXM CMoC Cu & Co (TFM & CMoC 89.0% NPM), 52.0% (Trading) 22.9% 77.1% Copper 7.9% IXM Tungsten 1.7% (Trading) Mo & W, 26.4% Moly 2.0% 11.0%
Source: China Molybdenum Source: China Molybdenum
Proforma selected financials, FY18A
CMoC IXM* 2018 IXM* Combined IXM of total RMB mn US $ mn RMB mn RMB mn % F Y18A Revenue 25,963 13,004 6.621 86,104 112,067 76.8% Gross profit 8,764 179 1,188 9,952 11.9% Attributable profit 4,636 34 228 4,864 4.7% Net Profit Margin (%) 17.9% 0.3% 0.3% 4.3%
As of YE 2018 Cash and equivalent 26,648 21 6.879 145 26,793 0.5% Bank borrowing (short term) 4,588 1,947 13,394 17,982 74.5% Bank borrowing (long term) 20,197 132 909 21,106 4.3% Net cash/(borrow) 1,863 (2,058) (14,158) (12,295) 115.1% Owners' equity 40,949 454 3,122 44,070 7.1% Net debt/equity Cash 453.6% 453.6% 27.9%
Derivative financial liabilities 4,326 157 1,077 5,403 19.9% Bonds payable 2,000 - - 2,000 0.0% Total debt (4,463) (2,215) (15,235) (19,698) 77.3% Owners' equity 40,949 454 3,122 44,070 7.1% Total debt/equity 10.9% 488.1% 488.1% 44.7% ROAE% 11.7% 7.6% 7.3% 11.0%
Total assets 101,216 3,106 21,361 122,578 17.4% ROA% 4.7% 1.1% 1.1% 4.0% *According to the simulated combined financial statements of NSRC Source: China Molybdenum
Page 8
Company Guide
China Molybdenum Co Ltd
CMoC: Peers’ valuations
Mk t PE PE Yield P/Bk P/Bk EV/EBITDA ROE ROE Net Price Cap 19F 20F 19F 19F 20F 19F 20F 19F 20F gearing Company Name Code Currency Local$ US$m x x % x x x x % % % Moly bdenum China Molybdenum 'H'* 3993 HK HKD 2.26 6,236 20.6 19.2 2.2 1.1 1.1 6.6 6.5 5.1 5.7 7.6 China Moly.Luoyang 'A'* 603993 CH CNY 3.62 11,358 37.6 34.9 1.2 2.0 2.0 10.9 10.7 5.1 5.7 7.6 Jinduicheng Molybdenum 'A' 601958 CH CNY 7.06 3,309 49.4 40.8 1.8 1.7 1.7 18.4 16.2 3.3 3.7 Cash
Conglomerate Bhp Group BHP AU AUD 40.76 141,117 14.5 11.6 8.0 2.9 2.6 6.5 5.9 18.3 23.3 20.2 Glencore GLEN LN GBP 2.66 44,136 11.6 9.3 5.7 1.0 1.0 4.4 4.0 7.9 10.1 64.4
Copper Anglo American AAL LN GBP 20.39 34,807 8.2 8.9 5.0 1.2 1.1 3.8 4.1 15.3 12.8 9.2 Antofagasta ANTO LN GBP 9.39 11,260 17.7 17.0 2.8 1.5 1.5 5.7 5.7 7.9 7.2 8.1 First Quantum Mrls. FM CN CAD 12.16 6,355 14.4 10.4 0.1 0.6 0.6 6.5 4.4 4.5 5.7 69.7 Freeport-Mcmoran FCX US USD 11.06 16,044 60.8 15.8 1.8 1.6 1.6 10.2 7.0 2.4 10.0 71.3 Jiangxi Copper 'H' 358 HK HKD 9.75 4,313 10.3 9.9 2.9 0.6 0.6 8.0 7.7 5.5 5.8 1.7 Oz Minerals OZL AU AUD 10.29 2,281 18.5 12.8 1.9 1.1 1.0 6.5 5.1 6.0 7.5 Cash Rio Tinto RIO AU AUD 98.90 110,295 9.5 10.6 7.3 2.4 2.3 5.3 5.8 26.0 21.5 Cash Southern Copper SCCO US USD 35.79 27,668 16.4 14.0 3.8 3.9 3.5 9.2 8.2 24.1 23.9 72.7 Vale On Adr 1:1 VALE US USD 12.99 68,645 6.0 6.5 0.0 1.3 1.2 3.9 4.3 19.6 18.0 22.9 Zijin Mining Group 'H' 2899 HK HKD 3.16 9,297 13.2 12.0 4.2 1.5 1.4 8.1 7.5 11.4 11.7 112.8
Cobalt Gem 'A' 002340 CH CNY 4.57 2,755 19.6 15.5 0.8 1.8 1.6 12.0 10.2 9.3 10.5 93.4 Nanjing Hanrui Cob. 'A' 300618 CH CNY 47.91 1,871 56.6 29.4 0.4 5.7 5.0 n.a. n.a. 10.9 17.7 13.0 Sherritt Intl.Restrctd Vtg S CN CAD 0.25 75 n.a. n.a. 0.0 n.a. n.a. n.a. n.a. n.a. n.a. 47.2 Zhejiang Huayou Cob.'A' 603799 CH CNY 23.38 3,663 23.4 17.7 0.4 3.0 2.6 13.3 10.1 10.4 12.2 73.6
T ungsten Chongyi Zhangyuan Tgtn. 'A' 002378 CH CNY 6.00 805 150.0 150.0 0.2 2.8 2.7 20.2 19.6 1.8 1.8 34.1 Xiamen Tungsten 'A' 600549 CH CNY 12.98 2,665 36.5 28.3 1.1 2.4 2.2 13.5 11.4 6.5 7.7 112.4 # FY19: FY20; FY20: FY21
Source: Thomson Reuters, *DBS HK
Page 9
Company Guide
China Molybdenum Co Ltd
CRITICAL FACTORS TO WATCH Cathode copper ASP (USD/t)
Critical Factors Earnings are most sensitive to changes in copper prices, followed by changes in cobalt prices. Thus, the industry outlook on copper and cobalt is a critical factor for the company. We estimate that every 1% change in copper prices will swing FY19F earnings by 2.5%. We estimate that every 1% change in cobalt prices will swing FY19F earnings by 0.3%.
Copper industry outlook: Tight supply of copper to support Metallic cobalt ASP (USD/lb) prices. Low copper prices in 2015-16 led to a collapse in investments in the sector. While it usually takes three years to ramp up capacity at a new copper mine, supply has tightened since 2017. Chile, the world’s largest copper producer representing 27% of the world’s output, saw its production sliding by 7.1% y-o-y for the first quarter of 2019. The 2019 China copper TC (treating charge) has declined by 32%, hitting a five-year low, suggesting lower availability of copper concentrates. So far in 2019, we have seen the prolonged stoppage of production at mines in Chile due to persistent union strikes. This could further escalate supply uncertainty. NPM copper sales volume (tonne) Besides, China’s expected ban on scrap copper imports (for Category scrap #6 plus #7) could affect c.15% of the country’s raw material supply. Meanwhile, we maintain our copper price assumption at US$5,800/US$6,000 per tonne for 2019/2020.
Cobalt industry outlook: Riding on cobalt consumption rebound driven by strong growth in new energy vehicles (NEV). China supply deficit widened in 2018, with cobalt consumption growing 30.0% to 143,321 tonnes. We project cobalt metals consumption, which China accounts for 50% of the world’s Tenke copper sales volume (tonne) consumption, to grow at high single digit in 2019 and 2020, driven by strong growth in battery chemicals. This should be fueled by output expansion of NEV and the increasing usage of nickel-cobalt-manganese (NMC) ternary material as cathode material for Li-ion batteries of NEVs. In 2018, we noticed that the market share of NMC ternary material in NEV batteries had increased to 46% versus 38% in 2017 as the increasing electrification of vehicles had boosted cobalt demand.
Cobalt sales volume (tonne)
Source: Company, DBSHK
Page 10
Company Guide
China Molybdenum Co Ltd
Appendix1: A look at Company's listed history – what drives its share price?
CMoC: Share price performance
HK$ per share 8 Average prices of cobalt plummeted from 7 the historical high level
6 CMoC announced to acquire Tenke 5 Fungurume Mining ("TFM") on 15 May 2016, as to ride on cobalt market 4 upcycle, the acquisition was completed in November 2016 3
2
1
0 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Source: Bloomberg Finance L.P.
CMoC: Share price vs LME cobalt price
HK$ per share US$/t 8 120
7 100 6 80 5 CMoC's share price closely correlated to cobalt price movement 4 60
3 40 2 20 1
0 0 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
CMoC -H (LHS) LME 3M cobalt price (RHS)
Source: Bloomberg Finance L.P.
Page 11
Company Guide
China Molybdenum Co Ltd
Balance Sheet: Op-CF and positive free cashflow to remain healthy. Our FY19F Leverage & Asset Turnover (x) Op-CF is seen to decrease by 8% y-o- y to RMB8.6bn chiefly dragged by the year-to-date correction in cobalt prices. We forecast capex in 2019 to climb to Rmb10bn before levelling off at RMB3bn thereafter. The budgeted capex is to primarily fund several projects at Tenke Mine, including the cobalt dryer project and implementation of debottlenecking projects. These aim to reduce transportation costs and optimise copper-cobalt production allocation. As such, we project FCF to be a negative RMB1.3bn in 2019 and then turn around to a positive RMB2.7bn in 2020 vs a positive RMB4.5bn in 2018. Capital Expenditure Net gearing. We forecast the company’s net cash position since 2017 and 2018 to be basically maintained into 2019 and 2020.
Share Price Drivers: New Energy Vehicle (NEV) industry development and cobalt prices.
Key Risks: Commodity price risks. The company’s earnings are most sensitive to changes in copper and cobalt prices. To derail the negative price momentum for cobalt, the decrease in supply of cobalt mine output would have to be better than expected. ROE Glencore guides that it is set to increase its 2019 mined cobalt output as its Katanga mine is scheduled commence operations after the debottlenecking programme is completed. If Glencore’s cobalt supply disruption is longer than market expectations, this will adversely impact global cobalt prices.
Forex risks. CMoC reported forex losses in 2017 mainly due to a significant depreciation of Congolese franc against the US dollar, on the back of the economic slowdown and political upheaval in DRC. The US dollar is a functioning currency for Forward PE Band CMoC’s cobalt and copper business, while the company has certain borrowings denominated in Congolese franc. In YTD 2019, the exchange rate of Congolese franc against US $ has largely stabilised. We forecast limited risk arising from fluctuations in forex for the year.
Environment, Social, Governance: CMoC extended its external assurance review in 2018 to cover all its international and China operating sites. CMoC has invested in machines to reduce the particulate matter produced during processing. At its China operations, the PB Band company has replaced coal-fired boilers with natural gas boilers, which resulted in a 38% reduction of sulfur dioxide emissions. According to the company, these investments will not result in a material financial burden.
Company Background China Molybdenum Co Ltd (“CMoC”) is a global diversified mining production company which is the world’s second largest producer of cobalt, the fifth largest producer of molybdenum, and one of the leading copper producers. In
2018, the company’s sales volumes of cobalt and copper were Source: Company, DBS HK 19,390 tonnes and 203kt respectively, based on metal tonnage.
Page 12
Company Guide
China Molybdenum Co Ltd
Key Assumptions FY Dec 2016A 2017A 2018A 2019F 2020F Cathode copper ASP 4,867.0 6,190.0 6,525.7 5,800.0 6,000.0 (USD/t) Metallic cobalt ASP 11.6 27.1 36.7 12.0 13.0 (USD/lb) NPM copper sales volume 35,962.0 35,168.0 31,659.0 31,000.0 31,000.0 (tonne) Tenke copper sales 27,356.0 214,866.0 171,961.0 185,000.0 185,000.0 volume (tonne) Cobalt sales volume 1,825.0 15,326.0 19,390.0 17,927.5 18,106.8 (tonne) Source: Company, DBS HK
Segmental Breakdown (RMBm)
FYDec 2016A 2017A 2018A 2019F 2020F Revenues (RMBm) Molybdenum, tungsten 2,816 3,772 4,749 2,606 2,702 and related products Niobium related products 1,140 4,504 4,977 5,021 5,160 Copper, cobalt and related 2,677 15,508 15,832 11,610 11,966 products Others 316 363 405 0 0 Total 6,950 24,148 25,963 19,236 19,827 (RMBm) Molybdenum, tungsten 1,304 1,953 2,860 1,087 1,186 and related products Niobium related products 249 791 1,144 1,155 1,187 Copper, cobalt and related 667 6,061 5,629 3,257 3,452 products Others (125) (213) (870) 0 0 Total 2,095 8,591 8,764 5,499 5,824 Margins (%) Molybdenum, tungsten 46.3 51.8 60.2 41.7 43.9 and related products Niobium related products 21.8 17.6 23.0 23.0 23.0 Copper, cobalt and related 24.9 39.1 35.6 28.1 28.8 products Others (39.5) (58.7) (214.9) N/A N/A Total 30.2 35.6 33.8 28.6 29.4 Source: Company, DBS HK
Page 13
Company Guide
China Molybdenum Co Ltd
Income Statement (RMBm) FY Dec 2016A 2017A 2018A 2019F 2020F Revenue 6,950 24,148 25,963 19,236 19,827 Cost of Goods Sold (4,854) (15,556) (17,199) (13,738) (14,003) Gross Profit 2,095 8,591 8,764 5,499 5,824 Other Opng (Exp)/Inc (805) (1,374) (1,030) (920) (948) Operating Profit 1,290 7,217 7,734 4,579 4,876 Other Non Opg (Exp)/Inc 301 (431) (170) (126) (130) Associates & JV Inc 7 13 69 69 69 Net Interest (Exp)/Inc (408) (1,417) (643) (993) (1,015) Dividend Income 0 0 0 0 0 Exceptional Gain/(Loss) 0 0 0 0 0 Pre-tax Profit 1,190 5,382 6,990 3,529 3,800 Tax (171) (1,786) (1,840) (929) (1,000) Minority Interest (21) (868) (514) (520) (560) Preference Dividend 0 0 0 0 0 Net Profit 998 2,728 4,636 2,080 2,240 Net Profit before Except. 998 2,728 4,636 2,080 2,240 EBITDA 2,744 11,437 11,594 8,196 8,416 Growth Revenue Gth (%) N/A 247.5 7.5 (25.9) 3.1 EBITDA Gth (%) N/A 316.8 1.4 (29.3) 2.7 Opg Profit Gth (%) N/A 459.4 7.2 (40.8) 6.5 Net Profit Gth (%) N/A 173.3 69.9 (55.1) 7.7 Margins & Ratio Gross Margins (%) 30.2 35.6 33.8 28.6 29.4 Opg Profit Margin (%) 18.6 29.9 29.8 23.8 24.6 Net Profit Margin (%) 14.4 11.3 17.9 10.8 11.3 ROAE (%) N/A 9.6 11.7 5.1 5.7 ROA (%) N/A 2.9 4.7 2.0 2.2 ROCE (%) N/A 5.9 6.5 3.7 3.9 Div Payout Ratio (%) 59.2 60.2 51.3 45.0 45.0 Net Interest Cover (x) 3.2 5.1 12.0 4.6 4.8 Source: Company, DBS HK
Page 14
Company Guide
China Molybdenum Co Ltd
Balance Sheet (RMBm) FY Dec 2016A 2017A 2018A 2019F 2020F
Net Fixed Assets 27,273 24,235 23,621 29,947 29,346 Invts in Associates & JVs 3,001 3,247 0 0 0 Other LT Assets 37,848 31,307 38,431 38,431 38,431 Cash & ST Invts 9,970 26,509 26,648 24,378 27,040 Inventory 5,083 5,705 6,616 4,943 5,035 Debtors 3,600 5,342 4,299 3,572 3,681 Other Current Assets 1,150 1,493 1,602 1,602 1,602 Total Assets 87,924 97,837 101,216 102,873 105,136
ST Debt 4,372 1,478 4,588 4,588 4,773 Creditors 3,088 2,991 1,148 1,660 1,691 Other Current Liab 8,522 9,034 10,243 10,243 10,243 LT Debt 23,377 22,034 20,197 20,197 21,012 Other LT Liabilities 14,229 16,391 15,443 15,443 15,443 Shareholder’s Equity 18,738 38,157 40,949 40,013 39,005 Minority Interests 15,599 7,752 8,649 10,729 12,969 Total Cap.& Liab. 87,924 97,837 101,216 102,873 105,136
Non-Cash Wkg. Capital (1,777) 515 1,126 (1,786) (1,616) NetCash/ (Debt) (17,779) 2,997 1,863 (407) 1,255 Debtors Turn (avgdays) 135.3 67.6 67.8 67.8 67.8 Creditors Turn (avgdays) 168.7 72.9 46.7 46.7 46.7 Inventory Turn (avgdays) 224.0 129.4 139.0 139.0 139.0 Asset Turnover (x) NM 0.3 0.3 0.2 0.2 Current Ratio (x) 1.2 2.9 2.5 2.1 2.2 Quick Ratio (x) 0.8 2.4 1.9 1.7 1.8 NetDebt/ Equity (X) 0.5 CASH CASH 0.0 CASH NetDebt/ Equityex MI (X) 0.9 CASH CASH 0.0 CASH Capex to Debt (%) 5.1 20.6 19.6 40.3 11.6 Z-Score (X) NA NA NA NA NA Source: Company, DBS HK
Cash Flow Statement (RMBm) FY Dec 2016A 2017A 2018A 2019F 2020F
Pre-Tax Profit 1,019 3,596 5,150 2,080 2,240 Dep.& Amort. 1,147 4,639 3,961 3,674 3,600 Tax Paid 0 0 0 (929) (1,000) Assoc. & JV Inc/ (loss) 0 0 0 0 0 (Pft)/ Loss on disposal of FAs 0 0 0 0 0 Chg in Wkg. Cap. (61) (1,535) (79) 2,913 (171) Other Operating CF 810 1,730 402 929 1,000 Net Operating CF 2,915 8,429 9,435 8,667 5,669 Capital Exp. (net) (1,416) (4,834) (4,852) (10,000) (3,000) Other Invts. (net) (28,959) (1,066) (2,807) 0 0 Invts in Assoc. & JV 0 0 0 0 0 Div from Assoc & JV 0 0 0 0 0 Other Investing CF 2,727 1,792 5,262 0 0 Net Investing CF (27,648) (4,109) (2,397) (10,000) (3,000) Div Paid (1,108) (2,147) (2,646) (936) (1,008) Chg in Gross Debt 24,243 (478) (1,428) 0 1,000 Capital Issues 0 0 0 0 0 Other Financing CF 856 9,998 227 0 0 Net Financing CF 23,991 7,372 (3,846) (936) (8) Currency Adjustments 0 0 0 0 0 Chgin Cash (742) 11,692 3,191 (2,269) 2,661 Opg CFPS (RMB) 0.18 0.52 0.44 0.27 0.27 Free CFPS (RMB) 0.09 0.19 0.21 (0.06) 0.12
Source: Company, DBS HK
Page 15
Company Guide
China Molybdenum Co Ltd
^ Bloomberg ESG Disclosure Scores rate companies annually based on their disclosure of quantitative and policy-related ESG data. It is based on a scoring scale of 0-100, and calculated using a subset of more than 100 raw data points it collects on ESG. It is designed to measure the robustness of companies' disclosure of ESG information in their reporting/the public domain. Based on Bloomberg disclosures, as of 25 Jan 2019, the global ESG disclosure average score is 24.92 and 22.14, 28.26, 49.97 for Environmental, Social and Governance, respectively.
DBS HK recommendations are based on an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return, i.e., > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable share price catalysts within this time frame)
*Share price appreciation + dividends
Completed Date: 1 Aug 2019 11:35:10 (HKT) Dissemination Date: 1 Aug 2019 16:45:56 (HKT) Sources for all charts and tables are DBS HK unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by DBS Bank (Hong Kong) Limited (“DBS HK”). This report is solely intended for the clients of DBS Bank Ltd., DBS HK, DBS Vickers (Hong Kong) Limited (“DBSV HK”), and DBS Vickers Securities (Singapore) Pte Ltd. (“DBSVS”), its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS HK.
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd., DBS HK, DBSV HK, DBSVS, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.
DBS Vickers Securities (USA) Inc (“DBSVUSA”), a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.
Page 16
Company Guide
China Molybdenum Co Ltd
ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS HK, DBSVS or their subsidiaries and/or other affiliates have a proprietary position in Jiangxi Copper Co Ltd (358 HK) recommended in this report as of 30 Jul 2019.
2. Neither DBS Bank Ltd nor DBS HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report.
3. Compensation for investment banking services: DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.
4. Disclosure of previous investment recommendation produced: DBS Bank Ltd, DBSVS, DBS HK, their subsidiaries and/or other affiliates of DBSVUSA may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS HK, DBSVS, their subsidiaries and/or other affiliates of DBSVUSA in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
Page 17
Company Guide
China Molybdenum Co Ltd
RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Australia This report is being distributed in Australia by DBS Bank Ltd, DBSVS or DBSV HK. DBS Bank Ltd holds Australian Financial Services Licence no. 475946. DBSVS and DBSV HK are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS Bank Ltd and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, and DBSV HK is regulated by the Hong Kong Securities and Futures Commission under the laws of Hong Kong, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report is being distributed in Hong Kong by DBS Bank Ltd, DBS Bank (Hong Kong) Limited and DBS Vickers (Hong Kong) Limited, all of which are registered with or licensed by the Hong Kong Securities and Futures Commission to carry out the regulated activity of advising on securities.
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia. Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report. Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. United This report is produced by DBS HK which is regulated by the Hong Kong Monetary Authority
Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd (“DBSVUK”). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication. Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at units 608-610, 6th Floor, Gate International Precinct Building 5, PO Box 506538, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Financial Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for Centre professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
Page 18
Company Guide
China Molybdenum Co Ltd
United Arab This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined Emirates in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell any financial product. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This report or any portion thereof may not be reprinted, sold or redistributed without our written consent. United States This report was prepared by DBS HK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate. Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions. DBS Bank (Hong Kong) Limited 13 th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong Tel: (852) 3668-4181, Fax: (852) 2521-1812
Page 19
Company Guide
China Molybdenum Co Ltd
DBS Regional Research Offices
HONG KONG MALAYSIA SINGAPORE DBS Bank (Hong Kong) Ltd AllianceDBS Research Sdn Bhd DBS Bank Ltd Contact: Carol Wu Contact: Wong Ming Tek (128540 U) Contact: Janice Chua 13th Floor One Island East, 19th Floor, Menara Multi-Purpose, 12 Marina Boulevard, 18 Westlands Road, Capital Square, Marina Bay Financial Centre Tower 3 Quarry Bay, Hong Kong 8 Jalan Munshi Abdullah 50100 Singapore 018982 Tel: 852 3668 4181 Kuala Lumpur, Malaysia. Tel: 65 6878 8888 Fax: 852 2521 1812 Tel.: 603 2604 3333 Fax: 65 65353 418 e-mail: [email protected] Fax: 603 2604 3921 e-mail: [email protected] e-mail: [email protected] Company Regn. No. 196800306E
INDONESIA THAILAND PT DBS Vickers Sekuritas (Indonesia) DBS Vickers Securities (Thailand) Co Ltd Contact: Maynard Priajaya Arif Contact: Chanpen Sirithanarattanakul DBS Bank Tower 989 Siam Piwat Tower Building, Ciputra World 1, 32/F 9th, 14th-15th Floor Jl. Prof. Dr. Satrio Kav. 3-5 Rama 1 Road, Pathumwan, Jakarta 12940, Indonesia Bangkok Thailand 10330 Tel: 62 21 3003 4900 Tel. 66 2 857 7831 Fax: 6221 3003 4943 Fax: 66 2 658 1269 e-mail: [email protected] e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand
Page 20