China Gold Group Holdings focuses on gold and copper mining. China Gold International is a gold and basic metals mining company registered in British Columbia, Canada, and is also listed in Hong Kong, China and Canada. The ultimate controlling shareholder of the company is China Gold Group Co., Ltd., holding 40.01% of the shares. The company is its only overseas listing platform. The company focuses on gold and copper mining, producing a total of 7.4 tons of gold and 85,000 tons of copper in 2022. The company's revenue grew rapidly, with a revenue CAGR of 24.65% for the three years 2020-2022. Net profit attributable to mother was $222.7 million in 2022.

Changshan Trench Mine: Deep resource exploration has been successfully completed, and production cost control has achieved remarkable results. The Changshan Trench Mine has now completed exploration of peripheral and deep resources. The estimated amount of resources discovered and controlled in 2022 increased 130% year-on-year, and the total amount of gold resources reached 168.2 tons. The mine's lifespan is expected to be extended by at least 15 years. The total production cost of gold in the Changshan Tou mine in 2022 was 1,340 US dollars/ounce, down 12.9% year on year; cash production cost was 803 US dollars/ounce, down 24.4% year on year. The sharp drop in gold production costs shows that the company's cost control at the Changshanhao Gold Mine has achieved positive results. Benefiting from cost control, the average gross profit of mineral gold in the Changshan Hou mine rose to 466 US dollars/ounce in 2022, up 79.2% year on year, corresponding gross margin of 25.8%, the highest level in the past five years.

Jiama mine: flexible adjustment of production organization, steady increase in copper concentrate revenue contribution. Jiama mine is rich in metallic mineral resources, containing copper, gold, silver, molybdenum, lead and zinc. Since the second half of 2021, the Jiama mine has increased the utilization rate of low-grade ores and strictly controlled operating costs.

Under these circumstances, the share of copper sales compared to the total revenue of the Jiama mine increased. In 2022, the Jiama mine copper sales reached 617.23 million US dollars, accounting for 73.71% of the total revenue of the Jiama mine in that year.

The rise in metal prices will continue to provide strong support for the company's performance growth. Gold prices showed an upward trend due to the impact of geopolitical risks such as the real interest rate of the US dollar, the Silicon Valley Bank incident, and the Palestinian-Israeli conflict, as well as the effects of large-scale continuous purchases of gold by central banks.

Profit forecasts and ratings: We expect the company to generate revenue of $480, 1,146, 1,254 million in 2023-2025. We expect the company's 2023-2025 EPS to be -0.09, 0.58, and $0.77, respectively. We gave the company 12 times PE in 2024, corresponding to a reasonable value of HK$54.29 (HK$7.8 per dollar), and for the first time coverage gave it a “superior to market” rating.

Risk warning: Product price fluctuations; global economic growth uncertainty; project construction progress falls short of expectations.