Incidents:
1) The company released its 2023 annual report. In 2023, the company achieved operating income of 61,244 billion yuan, an increase of 7.20% year on year; net profit to mother of 2,978 billion yuan, up 57.11% year on year; net profit after deducting non-return to mother was 2,987 billion yuan, an increase of 51.72% year on year.
2) The company released its report for the first quarter of 2024. In 2024 Q1, the company achieved operating income of 13.164 billion yuan, a year-on-year decrease of 1.37%; net profit to mother of 783 million yuan, an increase of 43.73%; net profit after deducting non-return to mother was 741 million yuan, an increase of 36.38% year-on-year.
2024Q1 mineral gold production grows
The 2024Q1 company produced 4,465 kg of mineral gold, an increase of 365 kg; 9864 kg of smelted gold, a year-on-year decrease of 163 kg; 18,700 tons of mine copper, a year-on-year decrease of 0.12 million tons; and 101,400 tons of electrolytic copper, a year-on-year decrease of 0.52 million tons. In 2023, the company produced 18.89 tons of mineral gold, a year-on-year decrease of 1.04 tons; 40.87 tons of smelted gold, an increase of 0.87 tons; 80,000 tons of mine copper, an increase of 669 tons; and 410,900 tons of electrolytic copper, an increase of 17,800 tons year-on-year. In 2024, the company plans to produce 18.63 tons of mineral gold, 37.63 tons of smelted gold; 761,000 tons of mine copper, and 392,300 tons of electrolytic copper.
The injection of the Shaling gold mine is expected to lead to an increase in production
In 2023, the company acquired the mining rights of the Shaling Gold Mine held by the Group, and the project is expected to be put into operation in the second half of 2025. According to the mineral rights assessment report, the gold production of the Shaling Gold Mine in 2025-2027 was 1.39/5.54/9.7 tons, and production stabilized at 11.08 tons after completion of production in 2028. The injection of the Shaling gold mine will increase the company's own gold production and enhance profitability.
Gold and copper prices are still in an upward cycle. I am optimistic about future price trends as of 2024/4/30. The closing price of Au9999 gold on the Shanghai Gold Exchange was 545.8 yuan/gram, up 23% year on year; Shanghai copper futures closed at 82,200 yuan/ton, up 22% year on year. Gold has the triple attributes of commodities, money, and finance. Under the new environment, the three resonate. The overall price of gold is still in a major upward cycle, and its value is expected to be revalued. As the Federal Reserve's interest rate hike enters the second half, its negative impact on copper prices is expected to weaken. Along with the increase in demand for copper in the new energy sector and the decline in the growth rate of global copper supply, we are optimistic about future copper price trends.
Profit Forecasts, Valuations, and Ratings
We expect the company's net profit to be 35.96/39.01/4 491 billion yuan in 2024-2026, respectively, and EPS of 0.74/0.80/0.93 yuan, respectively. Referring to comparable company valuations, we gave the company 21.58 times PE in 2024, with a target price of 16.01 yuan, maintaining a “buy” rating.
Risk warning: the Federal Reserve continues to raise interest rates; global central banks sell off gold; prices of gold, copper, and molybdenum fall; production of gold, copper, and molybdenum falls short of expectations; and factors such as safety, environmental protection, and policies adversely affect production.