Net profit from 24Q1 to mother was 141 million yuan, maintaining the “increase in holdings” rating
According to the company's quarterly report, it achieved revenue of 20.808 billion yuan in 24Q1 (yoy +24.98%, qoq +39.81%); net profit to mother of 141 million yuan (yoy +14.82%, qoq +34.14%). Due to the recent upward shift in gold prices due to various factors such as inflation expectations and central bank purchases, we assume that the 24-26 gold price increase will be 550/600/650 yuan/gram (previous value 500/550/550 yuan/gram), so we expect 24-26 EPS 0.70/0.95/1.16 yuan (previous value 0.69/0.92/1.05 yuan). Comparable company PE (2024E) average value is 22.5X (Wind unanimous expectation). Considering that the company's current gold business is mainly smelting, it is given to the company 20.0 X PE in 24 years, corresponding to the target price of 14.00 yuan (previous value 13.77 yuan), maintaining the “gain” rating.
The price of gold has risen, and the company's gross margin has risen
According to Wind data, the average spot price of gold on the 24Q1 Shanghai Exchange was about 487 yuan/gram, up 16.8% year on year and 5.1% month on month, driving the company's 24Q1 gross margin to 2.71% (yoy+0.08pct, qoq+0.12pct). The company's 24Q1 total period expense ratio was 1.13% (yoy-0.31pct, qoq-0.48pct).
Furthermore, changes in the company's fair value in the first quarter - $55.82 million, and asset depreciation of 76.62 million yuan had a certain impact on the company's performance, mainly due to changes in fair value of the company's hedging and inventory price reductions.
The company's gross profit mainly comes from the gold, silver, and copper smelting business. The sulfuric acid profit situation is a major variable. The company's profit mainly comes from gold mining and precious metal smelting. In '23, the precious metals (gold, silver) and copper smelting businesses accounted for 57.7% and 25.7% of the total gross profit, respectively. Relying on core technology in precious metal smelting and comprehensive recycling, raw materials for smelting mainly rely on external procurement. In the raw material procurement process, while purchasing conventional gold concentrates, the procurement of complex gold concentrates and non-ferrous metal concentrates and materials containing precious metals associated with precious metals such as gold and silver has been gradually enriched, using the advantages of comprehensive resource recycling to expand the supply sources of raw materials, reducing procurement costs to a certain extent; therefore, the company can also benefit from rising gold, silver, and copper prices to a certain extent. The company's sulfuric acid business lost 162 million yuan in gross profit in '23. According to Wind, sulfuric acid prices stopped falling and rebounded in February '24, and the profit and loss of the sulfuric acid business may be an important variable in changes in the company's performance in '24.
The company has formed a relatively complete gold industry chain. As a platform for the development of the Jiangtong Gold Sector, the company has established an integrated production and operation model for geological exploration, mining, mineral processing, smelting, refining and deep processing, creating favorable conditions for the company's continuous development. Currently, the company has been working in fields such as the production of scattered metals, various valuable elements and their compounds, purification and deep processing of rare metals, and has begun to deploy in the field of new high-purity metal materials such as semiconductor materials. Over the years, the company has been increasing the supply of self-sufficient raw materials through various methods to reduce external dependence on production materials; by the end of the reporting period, the company and its subsidiaries had completed reserve registration, and the reserves reserves were 150.38 tons. When Jiangxi Copper acquired control of the company, it promised to use the company as a development platform for Jiangtong's gold sector and inject high-quality gold assets owned by Jiangxi Copper and its controlling shareholders into the company.
Risk warning: The company's mineral production capacity investment fell short of expectations, and the gold price trend fell short of expectations.