Incidents. The company released its report for the first quarter of 2024. During the reporting period, the company achieved operating income of 2.77 billion yuan, an increase of 26.52% over the previous year; realized net profit of 50 billion yuan, an increase of 69.73% over the previous year; and realized net profit of 50 billion yuan without return to mother, an increase of 78.23% over the previous year.
Production is stable, and the cost of gold is falling. Judging from the company's product production and sales, in the first quarter of 2024, the company achieved gold production of 1.98 tons, sales of 2.28 tons, silver production of 20.88 tons, sales of 29.64 tons, lead production of 1,086.92 tons, sales of 1,468.49 tons, zinc production of 1,383.66 tons, and sales of 2,347.93 tons. In terms of cost, the cost of the company's gold products declined in the first quarter of 2024. The cost of its gold business was about 167.54 yuan/gram in 2023, and 156.32 yuan/gram in the first quarter of 2024.
The price of gold is expected to continue to rise, which is expected to drive the company's profits to continue to rise. In terms of gold prices, the average domestic gold price in the first quarter of 2024 was about 489.18 yuan/gram, up 3.9% month-on-month and 16.3% year-on-year.
The continued rise in gold prices was accompanied by a decline in the company's costs, which led to a continuous increase in the gross margin level of the company's gold business. The gross margin of the company's gold business rose significantly, from 60.76% in 2023 to 67.98% in the first quarter of 2024. Looking ahead, under the impetus of current re-inflation and possible interest rate cuts by the Federal Reserve during the year, it is expected that global gold prices will still have room to rise further, and corporate profits are expected to continue to grow.
Production has been verified, waiting for the product to be released. According to the 2024 production plan, the company plans to produce no less than 8 tons of gold. In the first quarter, the company produced 1.98 tons of gold and sold 2.28 tons, which basically met the company's target and verified the company's plans. Looking forward to the future, the company plans to produce 12 tons of mineral gold at the end of the 14th Five-Year Plan, with gold resources and reserves reaching 240 tons; at the end of 2026, 15 tons of mineral gold production, 300 tons of gold resources and reserves; at the end of 2028, 22 tons of gold resources and reserves; and 28 tons of mineral gold production at the end of the 15th Five-Year Plan, with gold resources and reserves reaching more than 600 tons.
Investment advice. The company performed well in the first quarter of 2024, and in anticipation of future interest rate cuts by the Federal Reserve, the price of gold may gradually rise. The company's net profit for 24-26 is estimated to be 2 billion yuan, 2.4 billion yuan, and 2.9 billion yuan, respectively. Maintain a “buy” rating.
Risk warning: prospecting and mining risks, risk of product price fluctuations, project approval progress falling short of expectations.