Due to a lower earnings per share forecast, we have lowered our target price for Zhaojin Mining (the “Company”) to HK$12.06, while maintaining the investment rating as “buy”. Our target price is equivalent to 36.0 times the 2023 price-earnings ratio and 22.1 times the 2024 price-earnings ratio. Zhaojin Mining has great potential for net profit growth in 2024-2025, which will be driven by rising gold prices and falling mineral gold production costs.

Benefiting from rising gold prices and falling mineral gold production costs, we predict that Zhaojin Mining's net profit will increase significantly in 2024 and 2025. We predict that the price of gold will rise in 2024 as the Federal Reserve cuts interest rates.

During the period when the Federal Reserve cut interest rates, gold assets had a high value. The decline in mineral gold production costs will be another driver of profit growth in 2024.

We believe the 2024-2025 decline in mineral production costs is underestimated. The decline in mineral gold production costs will be another major driver of profit growth in 2024-2025. In 2023, investors did not see a decrease in production costs, and the company's mineral gold production costs remained high in the first half of 2023. We believe that the decline in production costs will accelerate in 2024-2025 due to the expansion of production scale, particularly as new mines are put into operation.

Catalysts: Gold prices rose; the Federal Reserve cut interest rates early; financial market turmoil.

Risk: Gold prices fall; gold production is affected by external factors.