Incidents:
On March 30, 2024, the company released its 2023 annual report: in 2023, the company achieved operating income of 7.221 billion yuan, an increase of 15.23% over the previous year; net profit to mother was 804 million yuan, an increase of 78.21% over the previous year.
Opinions:
Gold prices fluctuated upward, cost reduction and fee control increased gross profit margin, and the company's performance was impressive. In 2023, due to the Federal Reserve's interest rate hike and the strength of the US dollar index, the increase in gold prices was limited, but against the backdrop of global economic fluctuations and heightened geopolitical risks, downstream demand for gold was strong, and gold prices fluctuated at a high level. The company took effective measures to reduce costs and control fees in domestic and foreign mines, and achieved a high increase in revenue and performance during the year. During the reporting period, the company achieved revenue of 7.221 billion yuan, an increase of 15.23% over the previous year. Among them, mineral gold production, which accounts for the highest share, increased by 5.79%, the total cost of maintenance per unit decreased significantly, and gross margin increased by 8.05pct to 35.69%. Driven by a sharp increase in the volume and price of mineral gold, the company achieved net profit of 804 million yuan during the year, a sharp increase of 78.21% over the previous year.
2024 annuity prices may continue to rise, and the company's ore resources and ore production will steadily increase.
Although the pace of interest rate cuts by the Federal Reserve has fluctuated, the direction of interest rate cuts has been determined. Combined with black swan events such as weak overseas economies and the Russian-Ukrainian war, the risk aversion sentiment has intensified, and gold prices may continue to rise. In 2023, demand for gold increased dramatically in markets including China, India, and Turkey. In 2023, the company added 996,000 tons of geological gold ore resources, and the additional production capacity of projects under construction such as Geelong Mining will gradually be released in 2024. The company is expected to further benefit from rising global gold prices and a steady increase in performance.
Profit forecast and investment rating: Based on the company's 2024 business target guidelines, we expect the company to achieve net profit of 1,174 billion yuan, 1,332 billion yuan, and 1.56 billion yuan respectively in 2024-2026, corresponding to PE of 23.16, 20.43, and 17.43 times, respectively. Covered for the first time, a “gain” rating was given.
Risk warning: The pace of the Federal Reserve's interest rate cuts falls short of expectations; macroeconomic fluctuations at home and abroad; geopolitical events; the progress of the company's mines under construction falls short of expectations; the effects of the company's cost reduction and efficiency measures fall short of expectations; and the data sources cited may be erroneous or biased.