Incident: On April 17, 2022, the company disclosed its annual performance report for 2022. The company's revenue for the full year of 2022 was 10.936 billion yuan, -3.67% year on year; operating profit was 394 million yuan, +6.82% year on year; total profit was 3.76 yuan, +1.28% year on year; net profit of the mother was 291 million yuan, -20.04% year on year; net profit of the non-return mother was 301 million yuan, -17.6% year on year.
A gold and precious metals sampling business was added, and the Pachingo project was included in the scope of the merger. In 2022, the company added gold and precious metals procurement business. The main reason is that the company completed the acquisition of all of NQM Gold 2 Pty Ltd's shares in the fourth quarter of 2022 and obtained control of the Parkingo gold mine in Queensland, Australia. NQMGold 2 Pty Ltd has been included in the scope of the company's consolidated statements as of November 30, 2022. After the completion of the delivery of the Parkingo project, it has reached full production capacity. The company's overseas professional management team has achieved remarkable results in cost reduction, efficiency improvement, quality improvement and production expansion through continuous optimization of personnel, equipment and production plans in the Pachingo mining area, providing an important guarantee for further exploration of the project's potential and long-term high-quality operation of the project. According to the “Selection Plan Design” prepared by Jinjian Engineering Design Co., Ltd., NQM Gold 2 Pty Ltd expects to produce 600,000 tons of raw ore on an annual basis. Parkingo's 2022-2025 production will be 2.87, 3.15, 3.35, and 3.37 tons, respectively.
The cost of the Pachingo project is stable, and its performance may benefit from rising gold prices. After the Silicon Valley banking crisis spread, risk prevention may become an important target for the Federal Reserve. It is expected that the Fed's monetary policy will become moderate in the later stages, the US economy will make a soft landing, and gold prices will continue to rise. On the cost side, according to the “Selection Plan Design”, the gold sampling cost for the Pachingo project is between 210-230 yuan/gram. On the price side, the closing price of Au9999 on the Shanghai Gold Exchange on April 17, 2023 was 445 yuan/gram. Based on this price, the 2023-2025 gold selection business can increase the company's gross profit by 720, 760 million yuan.
Optimize the bulk trade product structure and adhere to the “two-wheel drive” of precious metals+new energy materials and minerals. The development position of mineral trade and non-metallic ores as beneficial complements. During the year, the company stepped up efforts to optimize the product structure and business model of the bulk trade business, concentrated resources to expand products with higher strategic synergy, stronger profitability and better business stability, effectively improving the operational quality and profitability of the bulk trade business.
Profit forecasts. According to the Pachingo project plan, we adjusted the company's profit forecast. We expect the company's gold mining business revenue to be 11.0/14.0/1.49 billion yuan in 2022-2024, and total revenue of 109/124/139 yuan respectively, adjusted the 2022-2024 net profit forecast to 291/539/587 million yuan (previous value was 4.17/477/480 million yuan respectively), and PE corresponding to the closing price on April 17, 2023 was 34.2x/18.5x/16.9x, respectively As a gold stock, PE was clearly undervalued and raised to a “buy” rating.
Risk warning: gold price falls short of expectations; gold mine production falls short of expectations; impact of exchange rate fluctuations