Key points of investment:
Domestic mines are of excellent quality and have obvious cost advantages. By the end of 2023, the company had 453.9 tons of gold resources, 300 tons of equity, and an average grade of 3.58 g/ton. Among them, the country has 43.1 tons of gold resources, and the calculated average grade is 8.2 g/ton. The sales cost of gram gold in 2023 is 152.7 yuan/gram, which has a significant cost advantage. Domestic mines “build large mines and scale up”. Geelong Mining's new 180,000 tons/annuity ore beneficiation project is expected to be put into operation in 2024. Wulong Mining's beneficiation capacity of 3,000 tons/day has climbed. The Xidengping Gold Mine is officially put into operation, and production is increasing rapidly.
Overseas mines can be expected to reduce costs and increase efficiency. Overseas mines increased production and reduced costs, and the Sepon Gold Discovery mining project was put into operation, which is expected to supplement 300,000 tons of underground ore. The unit cash cost of Vientiane mining will drop 5.9% year-on-year in 2023; the WASSA Gold Mine pioneered two underground mining areas in 242 and bShoot Nanyan District to improve mining capacity and strive to build a large-scale gold mine with an annual output of no less than 10 tons.
The management has extensive experience in mining management and is actively involved in mergers and acquisitions to build an international gold producer. The chairman has rich management experience in the mining industry. He has served as the chairman of Shandong Gold and the president of Zijin Mining. During his tenure in Zijin from 2013-2016, he led a number of overseas mine mergers and acquisitions. Since joining Chifeng Gold, he has promoted the company's mergers and acquisitions of Sepon and Wassa mines to build a large-scale international gold miner, with gold production exceeding 10 tons in 2023.
The price of gold is supported, and those that underestimate the gold label have flexible performance. The end of the Fed's interest rate hike was compounded by safe-haven demand. The long-term trend of gold has not changed, and the price is still supported. The company's market capitalization output ratio and market capitalization resource ratio are relatively low for listed companies. Gold undervalues individual stocks, and performance elasticity is higher in the upward price cycle.
Profit forecast and investment advice: The company's net profit for 2023-2025 is estimated to be 16.9/23.0/2.54 billion yuan, corresponding to the current share capital EPS of 1.02/1.38/1.53 yuan/share, corresponding to the current closing price PE of 17/13/11 times. Considering that the company's gold growth potential and cost decline is expected to release performance, the company was given a valuation of 30XPE in 2024, corresponding to a target price of 30.47 yuan/share, covering the first time, and giving it a “buy” rating.
Risk warning: changes in metal prices fall short of expectations; risk of production capacity under construction being released less than expected; risk of falling costs falling short of expectations and affecting the release of the company's performance