Molybdenum News Center

China Molybdenum:Significant reduction in output may support price

As one of China’s two key molybdenum enterprises, China Molybdenum (CMOC or the Company) enjoys resource and cost advantages. Although prices of main products such as ferromolybdenum slid in 2011, sales increased and profitability of by-products including tungsten substantially improved and the Company’s performance still realized a16% growth.

Looking forward to 2012, although the Company’s molybdenum production plan declines drastically in 2012,we believe that molybdenum production cut is likely an industrial consensus, plus raised molybdenum resource tax, the molybdenum supply-demand situation may somewhat be improved.

Besides, the Company’s comprehensive tungsten resource development is worth expecting, its current contribution tothe Company’s performance reaches 24%, with long- and mid-term expansion possibility.

We expect the Company will realize RMB1.095 billion andRMB1.188 billion net profit for 2012 and 2013 respectively, reaping a growth of -2.5% and 8.5%,converted to EPSRMB0.22 and RMB0.24. Net assets per share will beRMB2.47 and RMB2.70 respectively.

In evaluation, we apply P/B evaluation. Considering the market concern for systematic risks, we give the Company1.5-times evaluation, the 12-month target price is HK$4.56,so we initiate it Accumulate rating.

More molybdenum product: http://www.molybdenum.com.cn
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Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Prices, WML Version: http://m.chinatungsten.com

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