Incident: The company released its 2023 annual report and 2024 quarterly report. Revenue of 2023 was 2,424 billion yuan, down 77.83%; net profit to mother was 445 million yuan, up 52.9%, with a discovery dividend of 0.5 yuan (tax included) for every 10 shares; gross profit margin of 40.81%, same increase of 35.39 pcts; net profit margin 18.2%, same increase of 15.58 pcts. 2024Q1's revenue was 380 million yuan, down 17.7%; net profit to mother was 106 million yuan, up 31% from the same period, down 26%. Among them, the gold business achieved profit of 130 million yuan, an increase of 28%. Based on this, we estimate the Q1 contribution loss of the trade business.
Comment:
In 2023, 2.83 tons of gold were sold, exceeding the performance betting target ahead of schedule. In 2023, the Pachingo Gold Mine achieved gold production of 2.85 tons, with sales volume of 2.83 tons, an increase of 8.4%; the average sales price of the company's gold business was 445.5 yuan/gram, achieving a gross profit margin of 52.7% and a unit production cost of 211 yuan/gram. In 2023, NQM, a wholly-owned subsidiary of the company's gold business, achieved net profit of 396 million yuan, and achieved a total of 134.68% of the three-year performance promise in 2022 to 2023, exceeding the performance gambling target one year ahead of schedule. As of June 30, 2023, the Pachingo gold mine had 2.01 million ounces (62.86 tons) of gold metal in line with JORC standards, an increase of 315,000 ounces (9.80 tons) over the previous year, and the plant selection and processing capacity increased from 600,000 tons to 700,000 tons.
The new energy mining industry is expanding its layout. The Yiteng graphite project is a large and very large flaky graphite deposit, with about 46.1 million tons of graphite resources that meet JORC standards, and some regions are in the resource exploration stage and have great potential for prospecting; the Liaoning silica project has 16.501 million tons of ore resources, including 4.308 million tons within the license. The deep mining license has increased storage by 12.193 million tons. There are many silica deposits in the empty area surrounding the mining license, with great potential for additional storage; the Shaanxi Vanadium Mine project has 9.499 V2O5 resources 10,000 tons. During the Pingtung construction process for supplementary exploration, The newly discovered ore body was not disclosed in the original geological exploration report. The company expects the amount of resources to increase to 651,500 tons, and the company will speed up license processing and project construction.
Clear out the trading business and focus on the gold+new energy mining industry. In '24, the company will firmly clear the relevant bulk trade business, fully focus on the main mining industry, return funds for mine construction and mining mergers and acquisitions, and implement “two-wheel drive for gold minerals and new energy new materials and minerals”. The company will continue to implement lean management to further improve cost control capabilities; strengthen exploration work in important target areas to further increase the amount of resources; increase prospecting efforts for high-quality precious metals, non-ferrous gold products and mineral resources, and expand mining resources and scale through direct mergers and acquisitions, fund mergers and acquisitions, or joint ventures.
Profit forecast: We expect the company's net profit to be 557 million yuan, 617 million yuan, and 655 million yuan respectively in 2024-2026, corresponding to PE 15.5 times, 13.9 times, and 13.1 times, respectively.
Risk factors: The pace of interest rate cuts by the Federal Reserve falls short of expectations; the company's output falls short of expectations, etc.