23H1's net profit increased 9.92% year-on-year, maintaining the “holdings” rating company 23H1 to achieve revenue of 32.228 billion yuan (yoy +50.30%) and net profit of 292 million yuan (yoy +9.92%); 23Q2 achieved revenue of 15.579 billion yuan (qoq -6.43%), and net profit of 169 million yuan (qoq +36.83%). We expect EPS to be 0.56/0.74/0.87 yuan in 23-25, and the average expected average of comparable company PE (2023E) Wind is 21.1X, giving the company 21.1X PE in '23, corresponding to a target price of 11.90 yuan (previous value of 13.51 yuan), maintaining the “increase in holdings” rating.
Profit margins for major products are divided, and overall gross margin has declined
23H1 produces 30.06 tons of gold (yoy +31.1%), 442.81 tons of silver (yoy +0.9%), 100,000 tons of electrolytic copper (yoy -0.5%), and 626,400 tons of sulfuric acid (yoy -4.4%). 23H1's gross profit margin was 2.86% (yoy-2.26pct). The decline was mainly due to the expansion of profit margins in the precious metals sector, making it difficult to offset the reduction in profit margins in non-ferrous metal smelting, trade, and chemical sectors. The gross margin of gold/silver/electrolytic copper/sulfuric acid products was 3.19%/9.41%/2.50%/-182.34% (yoy+0.14/+2.68/-0.09/-238.18pct), respectively; the company's cost control was effective, and sales, management, finance, and R&D expenses rates all declined year-on-year; investment income - 48.57 million yuan was mainly due to liquidation losses due to ineffective hedging in hedging and investment income formed in the global mining industry. The net return interest rate was finally 0.91% (yoy-0.33pct).
Guben Peiyuan, the company's multiple projects are progressing steadily
In terms of smelting, the company's comprehensive precious metal smelting support capacity is already at the leading level in China. In particular, it maintains international leadership in many technologies in complex ore processing. With the construction and implementation of the “Gold-containing Polymetallic Ore Valuable Element Recovery Technology Transformation Project” and the “Gold Extraction Tailings Comprehensive Recycling Project”, the company's ability to handle complex multi-element gold concentrates will be further enhanced. On the mining side, the company continues to increase the supply of self-sufficient raw materials through various means. The key procedures for the Liaoshang Gold Mine expansion and capacity expansion project have all been approved and are expected to be put into operation in '26; the company holds 20.87% of Wanguo Mining's shares; in '22, its Jinling Mine in Solomon Islands achieved trial production of 2,800 tons of gold concentrate, and the “exploration and transfer mining” work of the Tibet mine is still in progress; as a development platform for the Jiangtong gold sector, the company will give priority to obtaining high-quality gold assets under Jiangtong.
Short-term gold prices may still be in a volatile market. Continuing to be optimistic about the medium- to long-term trend of gold prices, the US CPI for July is in line with Bloomberg's expectations, but the Fed's remarks are still hawkish, compounded by the strong short-term economic resilience of the US, and the price of gold in August is under pressure. According to Huatai Macro's “US CPI is lower than expected and may weaken in the short term” on July 12, 23, we expect the possibility of further interest rate hikes in September-December to decline. Short-term pressure on gold prices may decrease at that time. According to Huatai Nonferrous's “Short-Term Flatness, or Leap Beyond Abyss” on May 23, 23, US monetary policy has historically ended a “transition period” where interest rate hikes have ended without entering interest rate cuts, and the price of gold may have fluctuated. In the medium to long term, we think we cannot rule out subsequent interpretations of pressure from the US real economy and financial system, leading to a shift in the Fed, then the price of gold may regain its upward trend.
Risk warning: Environmental protection and other policies have led to a decline in production and changes in commodity prices.