The company released the 2023 report and the 2024 quarterly report, Chifeng Gold achieved operating income of 7.221 billion yuan in 2023, achieving net profit of 804 million yuan, +78.21% year over year; 2024Q1 achieved operating income of 1,854 billion yuan, +16.83% year over year, and realized net profit of 210 million yuan, or +166.41% year over year.
Ore production increased, and multiple projects continued to advance
The company produced 14.35 tons of mineral gold in 2023 (+5.79% YoY), with 3.32 tons of gold produced in China (+43.1% YoY) and 11.03 tons of gold from overseas mines (YoY -2%). Mainly due to the 23Q3 Venus Vasa flood affecting production, the annual output was slightly lower than the 14.60 tons planned at the beginning of the year. In 2024, the company aims to achieve 16.02 tons of gold production and sales, 5,300 tons of electrolytic copper, 35,800 tons of copper, lead and zinc powder, 600 tons of molybdenum powder, and 3,700 tons of rare earth oxides. The company's new construction project went smoothly. Wulong Mining's 23H2 daily mineral processing capacity increased to more than 1,800 tons, the Xidengping Gold Mine 140,000 tons/year mining and construction project was put into production in October 2023, and Geelong Mining's additional 180,000 tons of gold ore beneficiation expansion project is expected to be put into trial production in June 2024. In addition, the company has stepped up prospecting and storage expansion efforts at home and abroad, adding 5.3 million tons of gold ore resources by the end of 2023.
Benefiting from the rise in gold prices and the company's cost reduction, profit margins continued to be optimized. The average price of gold on the Shanghai Gold Exchange was 449.91 yuan/gram, +14.71% year-on-year. The average sales price of the company's domestic/overseas mines in 2023 was 455.92/429.75 yuan/gram, respectively.
Since 2024, the price of gold has continued to rise due to geopolitical conflicts. The average price of the 24Q1 Shanghai Gold Exchange was 489.18 yuan/gram, +16.35%. The company also reduced costs and increased efficiency through centralized procurement and technical optimization, driving a continuous increase in profit margins. The 24Q1 company's gross margin and net margin were 33.46% and 12.81%, respectively, +4.64 and +7.12pcts, respectively.
Investment advice
We estimate that Chifeng Gold's net profit for 2024-2026 will be 12.7/15.9/1.94 billion yuan respectively (the previous value was 12.1/15 billion yuan in 2024-2025, taking into account the increase in gold prices), and the corresponding PE will be 21.5/17.2/14.1 times, respectively, maintaining the purchase rating.
Risk warning
Gold prices fluctuate greatly; mine production falls short of expectations; safety incidents affect production risks, etc.