Key points of investment
The company released its 2023 annual report, with a high increase in net operating cash flow and a peak in profit in 23Q4
Looking at the full year: Achieved revenue of 7.2 billion yuan, +15% year over year; net profit to mother of 800 million yuan, +78% year over year; gross profit margin of 32.6%, +3.9 pct year on year; net operating cash flow of 2.2 billion yuan, up 1,113 billion yuan year on year
Looking at a single quarter: 23Q4 achieved revenue of 2.2 billion yuan, +21% year over month; net profit to mother of 280 million yuan, +417% year over month, 37% month on month; gross profit margin of 36.8%, +17.6 pct year on year, +8.2 pct month on month; net operating cash flow of 1,005 billion yuan, +389 million yuan year on month.
Gold production and sales increased year-on-year
1) The whole year: output 14.35 tons, +5.8% year on year; sales volume 14.51 tons, 4.7% year on year. 2) 23Q4: Production 4.12 tons, +8.9% YoY, +23% month-on-month; sales 4.08 tons, +1.8% YoY, +27% month-on-month.
Against the backdrop of the appreciation of the US dollar, the company has taken more measures to reduce costs and control fees
The appreciation of the US dollar: When converting the cost of overseas mines, the US dollar to RMB exchange rate was 7.0467 yuan to RMB 7.0467 in 2023, compared to 1 US dollar to RMB 6.7261 in 2022.
The company's full maintenance cost continued to decrease throughout the year: 1) sales cost 280.2 yuan/gram, +1.1% year over year; 2) cash cost 210.8 yuan/gram, +1.8% year over year; 3) total maintenance cost 267.2 yuan/gram, -12.0% year over year.
Vientiane Mining: 1) Sales cost $1489.9 per ounce, -2.5% YoY; 2) Cash cost $1024.6/oz, -5.9% YoY; 3) Total maintenance cost $1330.0/oz, -9.9% YoY.
Venus Vasa: 1) Sales cost $1315.5 per ounce, +16.5% YoY; 2) Cash cost $939.1 per ounce, +18.9% YoY; 3) Total maintenance cost $1197.1 per ounce, -12.7% YoY.
Domestic mines: 1) sales cost 152.7 yuan/gram, -17.2% YoY; 2) Cash cost 168.8 yuan/gram, -15.9% YoY; 3) Total maintenance cost 198.8 yuan/gram, -27.2% YoY.
Construction is progressing steadily and mining technology reform in Laos has great potential for future growth
Wulong Mining: The underground development project continues to advance to increase mining capacity as soon as possible to meet the needs of the 3,000 tons/day selection plant — the average daily mineral processing volume of the plant has increased to more than 1,800 tons in the second half of 2023.
Geelong Mining: The 180,000 tons/annuity ore beneficiation expansion project is progressing steadily, and trial production is expected in June 2024.
Vientiane Mining: Concentrate regrinding+resin beneficiation process technology reform, the recovery rate is expected to reach 75% or more in 2024, compared to 66.5% in 2022.
Venus Vasa: Bringing in contractors to develop 242 ramps and B-shoot southern ramps, opening the way for underground mining in 2024 and the next 5 years for Vasa.
Profit forecasting and valuation
The company increased production and reduced costs, compounded by the high gold price background, and is expected to achieve rapid growth in the industry. From 2024 to 2026, we expect the company's net profit to be 1,425, 17.81, and 2,372 billion yuan, an increase of 77.20%, 25.03%, and 33.18%; the corresponding EPS is 0.86, 1.07, and 1.43 yuan, and the corresponding PE is 21.20 times, 16.96 times, and 12.73 times.
Risk warning
The Fed's interest rate hike exceeded expectations; the company's cost reduction and efficiency effects fell short of expectations; the company's gold production growth fell short of expectations