Event: the chairman proposed that the company should buy back shares with its own funds through centralized bidding transactions. On September 5, 2023, the company received a letter from the chairman of the company, Mr. Niu Lei, proposing to buy back the shares of Shandong Yulong Gold Co., Ltd., based on the confidence in the future sustainable development of the company and the recognition of the long-term value of the company, in order to safeguard the interests of investors and enhance investors' confidence in the company. It is suggested that the company should buy back shares with its own funds (0.5-100 million yuan) through centralized bidding transactions.
The repurchased stock is used for the company's equity incentive or employee stock ownership plan. The total amount of repurchase funds shall not be less than RMB 50 million (inclusive) and shall not exceed RMB 100 million. In order to further improve the corporate governance structure, build a long-term incentive and restraint mechanism, fully mobilize the enthusiasm of the company's employees, and effectively combine the interests of shareholders, the company's interests and the personal interests of employees, the shares repurchased this time will be used in the company's employee stock ownership plan or equity incentive at an appropriate time in the future. The repurchased shares shall be transferred (granted) within three years after the disclosure of the implementation result of the share repurchase and the announcement of share changes; if the company fails to complete the transfer (grant) within the prescribed time limit, the untransferred (granted) shares will be cancelled.
The proportion of repurchased shares accounts for about 0.43% of the company's current total share capital. In terms of quantity, according to the lower limit of the total amount of repurchase funds and the upper limit of the repurchase price, the number of shares to be repurchased is about 3333334 shares, accounting for 0.43% of the company's current total share capital; according to the upper limit of the repurchase amount and the upper limit of the repurchase price, the number of shares to be repurchased is about 6666666 shares, accounting for about 0.85% of the company's current total share capital. In terms of price, the price of the proposed repurchase does not exceed RMB 15 per share (inclusive), which is not higher than 150% of the average trading price of the company's shares in the 30 trading days before the buyback resolution is passed by the company's board of directors.
Profit forecast. Pajingo Gold Mine has reached full load production since delivery, in line with expectations. We estimate that the company's gold production and sales volume in 2023-2025 will be 3.15max 3.35max 3.37t, revenue will be 110max 107 / 10.2 billion yuan (trade plate that reduces gross profit), net profit forecast for 2023-2025 will be 5.52pm 6.00 / 660 million yuan respectively, and closing price on September 8, 2023 will be 14.1x/13.0x/11.8x respectively. As a gold precious metal sector, PE is undervalued obviously. Maintain a "buy" rating.
Risk hints: gold prices are lower than expected; gold production is not as expected; exchange rate fluctuations