The company published its 2023 annual report. In 2023, the company achieved revenue of 8.423 billion yuan, +6.82% year-on-year, and net profit to mother of 686 million yuan, +70.77% year-on-year. Among them, Q4 achieved revenue of 2,039 billion yuan in a single quarter, -2.76% year-on-year, and net profit of 30.59% month-on-month, and net profit to mother of 321 million yuan, +135.03% year-on-year, and +185.57% month-on-month in Q4.
The main business focuses on gold. Gross profit has increased dramatically, and asset impairment has increased. Among the company's main businesses in 2023, the gold business achieved revenue of 7.672 billion yuan, +7.77% year-on-year, while the copper business achieved revenue of 301 million yuan, +9.34% year-on-year. On the cost side, the company's financial expenses in 2023 were 608 million yuan, +13.97% year-on-year, mainly due to increased financing; management expenses were 1,302 million yuan, the same year on year; sales expenses were 31 million yuan, -6.88% year on year, mainly due to a decrease in gold transaction fees this year. The company's gross profit increased by 714 million yuan in 2023, +26.09% year-on-year, mainly due to increased sales of self-produced funds and rising gold prices. As the main driver for performance growth, the annual fixed asset impairment was 266 million yuan, an increase of 227% over the previous year, dragging down performance. It is considered mainly due to annual impairment losses of property, plant and equipment.
Buyout gold production declined, copper production increased, and rising gold prices led to an increase in gross margin. The company's total gold production in 2023 was 24.68 tons, of which mineral gold (including buyout gold) production was 17.58 tons, -8.63% year over year, and smelting and processing gold was 7.11 tons, -12.39% year over year. The reason for the decline in gold production was the reduction in the company's buyout gold.
Through optimized production organization and copper mine production, the company's annual copper production was 5010 tons, +15.36% year over year. The average price of TD gold on the Shanghai Gold Exchange in 2023 was 449.31 yuan/gram, +14.58% year over year. Driven by rising gold prices, the company's overall gross profit margin in 2023 was 40.01%, +6.33pct year on year.
Q4 Performance increased month-on-month, and fair value losses decreased. The company's Q4 net profit increased sharply month-on-month. On the one hand, it benefited from the rise in Q4 gold prices in 2023, and the average price of Q4 futures gold on the Shanghai Stock Exchange increased by +2.6% month-on-month, driving an increase in profitability. On the other hand, the company's Q4 fair value changes decreased. As of Q4, the fair value change item was -0.7 billion yuan, reversing a loss of 144 million yuan from -216 million yuan in Q3.
The pace of exploration and storage growth has been accelerated, and the results in resource allocation have been remarkable. The company carried out internal exploration and epitaxial mergers and acquisitions throughout the year. It invested 123 million yuan in geological exploration, and discovered that 33.83 tons of new metals were added. Major breakthroughs were made in prospecting at the Xiadian Gold Mine, Dayin Gezhuang Gold Mine, and Sabzhuang Gold Mine. At the same time, it accelerated external development and launched a comprehensive tender offer with Tietuo Mining. By the end of 2023, the company had 1,185 tons of gold resources and 472 tons of recoverable reserves.
The dual key projects are progressing smoothly, and the future of offshore gold mine development can be expected. The company holds 70% of the shares in the offshore gold mine. The offshore gold mine has now fully entered the fast track of construction. The construction is progressing smoothly. It is expected to be completed and put into operation in 2025. After completion of the project, the expected harvesting scale is 12,000 tons/day, which can contribute 15-20 tons of gold per year after delivery. According to research reports, the total cost of Kejin is only 120 yuan/gram. The mine has excellent profitability. As the largest single gold mine in Asia, future development can be expected.
Profit forecast and investment advice: The net profit for 2023-2025 is expected to be 6.8/12.6/1.64 billion yuan, respectively, corresponding to PE 46/25/19. Considering the growth brought about by the commissioning of offshore gold mines, the “recommended” rating is maintained.
Risk warning: Gold prices fall, the risk of changes in the Federal Reserve's monetary policy, and the project falls short of expectations.