The company's 20H1 homing net profit fell 8.51% compared with the same period last year, maintaining an overweight rating based on future growth
The company's 20H1 operating income was about 16.446 billion yuan, an increase of 26.62% over the same period last year, while the net profit returned to its mother was about 134 million yuan, down 8.51% from the same period last year. The company plans to raise funds through a non-public offering to reduce the debt ratio, expand the business scale, improve the utilization rate of gold production capacity, and at the same time invest in the expansion of self-produced gold production capacity; Jiang Tong, the controlling shareholder, further promises to inject Jiangxi gold in the future; the company's gold production is expected to continue to grow in the future. We estimate that the 20-22 net profit of the company will be 399 million yuan, 699 million yuan, 948 million yuan, maintaining the overweight rating.
The increase of gold and silver production but the increase of cost leads to the decrease of gross profit margin, which is a drag on the performance of chemical business.
20H1, the company completed gold production of 24.83 tons, an increase of 44.01 percent over the same period last year; silver production of 395.25 tons, an increase of 49.17 percent over the same period last year; electrolytic copper production of 70200 tons, an increase of 8.83 percent over the same period last year; and 581500 tons of sulfuric acid, a decrease of 8.67 percent over the same period last year. The revenue of gold and silver is about 77.4 yuan and 1.36 billion yuan respectively, and the cost is about 72.5 yuan and 1.27 billion yuan respectively. The increase in revenue but the increase in cost leads to a decrease in gross profit margin. The gross profit margin of the two businesses is 6.32% and 6.89% respectively, down 3.81% and 1.72 pct compared with the same period last year. The revenue of chemical production business is about 187 million yuan, and the gross profit margin is-8.06%, which is down 12.98pct from the same period last year. The revenue of electrolytic copper business is about 4.78 billion yuan, and the gross profit margin is 0.14%, down 0.2 pct from the same period last year.
The company plans to invest in the expansion of its own gold mine, while Jiang Copper has promised to inject Jiangxi gold in the future.
The company and its subsidiaries have 1 valid prospecting certificate and 13 mining warrants, and the identified gold reserves that have been recorded are 156.57 tons. The company announced on July 30 that it intends to invest about 1.232 billion yuan in the construction of Liaoshang Gold Mine's boundary expansion and capacity expansion construction project; the mine construction scale is 900,000 tons per year, with a service life of 20 years; within the scope of mining rights, there are a total of 75529 kg of geological resources and reserves corresponding to gold and metal, with an average grade of 3.71g / ton. At the same time, Jiang Copper further promised in June 2020 that within 60 months from March 2019, the gold reserves of the gold deposits under Jiangxi Gold Co., Ltd. would be registered with the Ministry of Natural Resources, and the mining license and production safety license would be obtained. after meeting the mining conditions, the relevant work on the transfer of the interest to Hengbang shares will be started within 12 months.
Jiang Copper plans to subscribe for all non-public offering shares to help the company reduce its debt and increase production.
In 1919, Jiangxi Copper became the controlling shareholder of the company through agreement, and took the company as the development platform of the group's gold plate. The company announced on July 30 that Jiangtong intends to subscribe for all non-public offering shares at 10.54 yuan per share. The company will raise 2.5044558 billion yuan, of which 2 billion yuan will repay the loan to reduce financial expenses; the rest will supplement the working capital to expand the company's business scale and improve the utilization rate of 50t gold smelting capacity. According to the company announcement, the utilization rate of the company's gold capacity in 19 years is about 83.77%.
The performance is expected to grow steadily and maintain the overweight rating.
In view of the fact that the sharp decline in the gross profit margin of the company's chemical business is a drag on the performance of the company, we downgrade the performance of the company by 20%. However, according to 20.06.19, we believe that the crisis and monetary easing scenario is good for gold, and gold prices have a long-term rising pattern. As well as the expected decline in financial expenses after financing, we raised the company's performance for 21-22 years. The net profit of 20-22 homing is 948 million yuan (the previous value is 462). Comparable company 20 years PE wind average 45.7 times, taking into account the company's future mining and smelting capacity is expected to gradually expand, we give the company 20 years 48-50 times PE valuation, the target price of 21.12-22 yuan (the previous value 12.75-13.77 yuan), maintain the overweight rating.
Risk tips: metal prices fall, the company's production is not up to expectations, costs rise sharply, and so on.