Key points of investment:
Incident: The company released its 2023 report and 24Q1 quarterly report. In 2023, it achieved revenue of 2.42 billion yuan, -77.8%; realized net profit of 445 million yuan, +52.9% year on year; net profit after deducting non-return to mother was 446 million yuan, +48.1% year over year. 24Q1 achieved revenue of 380 million yuan, -17.7%/-52.6% YoY; realized net profit to mother of 106 million yuan, -26.2%/+31.1% YoY.
2023: The first full year of the gold mine also led to a significant increase in profits. 1) The gold mining business achieved net profit of 396 million yuan for the whole year. Volume: The company produced 2.84 tons of gold in '23, +2.51 tons year on year.
Price: The average stock price in London in '23 was 1,941 US dollars/ounce, off 440 yuan/gram. Profit: Achieved gross profit of 660 million yuan in '23, achieved a gross profit margin of 52.7%, converted to a gold cost of 210 yuan/gram; realized net profit of 396 million yuan, and net profit of tonnage of 140 million yuan/ton. 2) In '23, the trade business achieved gross profit of 323 million yuan, or -38.2% year-on-year; in reverse calculation, trade and other businesses achieved net profit of 50 million yuan.
2024Q1: The trade business dragged down performance, but gold production and prices were in line with expectations. 1) The gold selection was in line with expectations. Volume: 24Q1 achieved revenue of 354 million yuan, +6.1% year-on-year. Based on the average price of gold, sales volume of about 0.75 tons is expected. Price: The average price of 24Q1 London spot gold was 2,070 US dollars/ounce, off 472.7 yuan/gram, +57 yuan/gram year over year, +19 yuan/gram, and +13.5%/+4.2% month on month. Profit: 24Q1 Gold achieved net profit of 131 million yuan, +28.0% year-on-year, which translates to a net profit of 175 million yuan/ton per ton. 2) The trade business was divested, which dragged down part of the profit. In '24, the company will resolve the relevant bulk trade business, and will no longer engage in bulk trade business unrelated to the mining business in the future. Looking at 24Q1 revenue, gold was 354 million yuan, accounting for 93%. Revenue from other businesses continues to shrink, and the trading business will be divested.
2024: Xanthine production is expected to reach 3 tons, and the trade business will be divested. 24Q1 achieved net profit of 106 million yuan, of which net profit from the gold business was 131 million yuan, and trade and other businesses are expected to drag down the company's performance of 25 million yuan. Assuming that 24Q2 gold had an average price of 530 yuan/ton, if there were no impairment factors such as trade, it could achieve net profit of 160 million yuan in a single quarter, and gold production is expected to reach 3 tons for the full year of 2024.
Profit forecast and investment advice: According to the latest situation, we have adjusted the company's trade business forecast and gold price. The company's net profit for 24-26 is 5.7/6.1 billion yuan (the value was 6.7/630 million yuan before 24-25), and the corresponding EPS is 0.73/0.77/0.78 yuan, respectively, maintaining the 2024 20X valuation, corresponding to the target price of 15.47 yuan/share, and maintaining the “buy” rating.
Risk warning: the price of gold falls short of expectations, production safety risks