The company released its 2023 annual report: In 2023, it achieved operating income of 2.42 billion yuan, -77.8% year-on-year, and realized net profit of 450 million yuan to mother, +52.9% year-on-year. 23Q4 achieved net profit of 80 million yuan to mother, -47.1%-25.5% year-over-year, respectively.
The company released its 2024 quarterly report: 24Q1 achieved operating income of 380 million yuan, -17.7%/-52.6% year over year, and realized net profit of 110 million yuan, or -26.2%/+31.1% year over month.
Mineral gold produced and sold 2.8 tons, and the Pachingo gold mine achieved the best performance in history. In 2023, the company's mine gold production and sales were 2.84 tons/2.83 tons respectively, +9.5%/+8.7% year-on-year, setting a new high in production in the Pachingo mining area in the past 15 years. The annual sales unit price of gold was 445 yuan/gram, and the unit sales cost was 210 yuan/gram, the year-on-year -21 yuan/gram; the Pachingo Gold Mine achieved net profit of 374 million yuan for the whole year, the highest level in history. The estimated net profit per unit was about 132 yuan/gram.
Positive progress has been made in increasing reserves. In terms of gold mining, as of the end of June 2023, the Pachingo gold mine had 62.86 tons of gold metal in line with JORC standards, +9.8 tons compared to the previous year. In the vanadium ore project, during the Pingtong construction process for supplementary exploration, the ore body was not revealed in the original geological exploration report. The thickness of the ore body was about 80 meters, the average grade was 1.01%, and the inclination angle was about 50 degrees. The analysis determined that the No. 2 ore body was lengthening. The total control length of the No. 2 ore increased from 250 meters to the current total control length of about 550 meters, which is expected to greatly increase the resource volume of the vanadium project.
Resolutely identify non-core businesses, and plan to change the name of the company. In 2024, the company will firmly clear the relevant bulk trade business, and will no longer engage in bulk trade business unrelated to the mining business in the future. At the same time, the company will combine the annual report data to change the Securities Regulatory Commission's industry classification and company abbreviation, change the company's industry classification application to mining-non-ferrous metal ore mining and selection industry, and change the company's abbreviation application to “Yulong Gold” or “Yulong Mining” to further highlight mining attributes.
Plan equity incentives or employee shareholding, and establish a long-term incentive mechanism. In 2024, the company will demonstrate and plan the company's equity incentives or employee shareholding plans based on strategic development goals, main business transformation, mining layout, etc.
Maintain a “Highly Recommended” investment rating. The company is expected to achieve net profit of 5.3/6.3/660 million yuan in 2024-2026, corresponding price-earnings ratios of 16.9/14.3/13.6 times, respectively, and maintain a “highly recommended” investment rating.
Risk warning: falling precious metals prices, risk of mine safety accidents, falling short of expectations in commissioning projects, geopolitical risk, risk of exchange rate fluctuations, etc.