Event: Shandong Gold Releases 2023 Annual Report & 2024 Quarterly Report
In 2023, the company achieved operating income of 59.275 billion yuan, and realized net profit of 2,328 billion yuan, +86.84% year over year; the company's 2024Q1 revenue was 18.957 billion yuan, +44.73% year over year, and realized net profit of 700 million yuan, +59.48% year over year.
Gold prices rose and production capacity was released, and the company's performance grew steadily
The increase in the company's performance in 2023 was mainly due to rising gold prices and the continued release of production capacity. Price: The average international price of gold in 2023 was 194.54 US dollars/ounce, +8.0% year over year. The company relied on the research team's market tracking and price research capabilities to grasp price trends and optimize trading strategies. The average sales price of self-produced gold throughout the year was higher than the average market price of 2.79 yuan/gram. Volume: In 2023, the company promoted production optimization in important mining areas. Among them, the year-on-year increases of 15.54%, 10.73%, and 5.74% of gold mine production at West and Zhongbao, Jinzhou and Sanshandao gold mines reached 15.54%, respectively. Yintai Gold also contributed to the increase, and overseas Belladero gold mine production reached 6.4 tons (+6.37% year over year). In 2023, the company's total self-produced gold production reached 41.78 tons (+8.03% year over year), maintaining the leading position in domestic gold production.
Since 2024, the price of gold has continued to rise due to international geopolitical conflicts and central bank gold purchases. The average international price of gold in 24Q1 was 2,070 US dollars/ounce, +10% over the same period last year, a record high.
In terms of volume, the company's 24Q1 self-produced gold production reached 11.91 tons (+26.89% year over year); outsourced gold production was 19.90 tons (+40.5% year over year); and small gold bars produced 7.15 tons (-10.9% year over year). The company continues to promote capacity expansion in key mining areas and continues to release production capacity. It is expected that production of its own capital and outsourced gold will continue to rise.
Cost reduction and efficiency continue to advance, and the lean operation process is accelerated
The company achieved a gross profit margin of 14.56% in 2024Q1, +0.07pct year on year, and a net profit margin of 5.57%, +1.72 pcts year over year. The increase in net interest rates is mainly due to the company's continued efforts to reduce costs and increase efficiency, standardize and standardize production management, technical management, and site management of mining enterprises, and break down various cost indicators. The company's 2024Q1 sales/management/R&D/finance expenses ratio was 0.21%/3.17%/0.50%/1.76%, respectively, +0.17/ -0.30/ -0.02/-0.28pct, respectively. The management rate was significantly reduced.
Construction of multiple projects is progressing, and production is expected to reach a new high
The company released incremental projects one after another: accelerate the selection and tailings of the Namutini mine project in Ghana, and continue to expand the capacity of the Linglong mine; on May 29, the company announced that it had obtained a mining license after the integration of the original mining rights of the Sanshan Island Gold Mine and the Xiling Gold Mine prospecting rights, and will then actively promote the construction of the Sanshan Island Gold Mine. The output of the Sanshan Island mine site in 2023 is 5.77 tons, and it is expected that the production of self-produced gold will increase again as the project progresses.
According to the announcement, the company plans to produce no less than 47 tons of gold in 2024, and the holding subsidiary Yintai Gold plans to produce 12 tons and 15 tons of mineral gold in 2025 and 2026, respectively.
Investment advice
We expect the company's net profit to be 37.3/51.7/6.41 billion yuan in 2023-2025 (the previous value was 26.6/3.21 billion yuan in 2024-2025, taking into account the upward increase in gold prices), and the corresponding PE will be 33.3/24.0/19.4 times, respectively, maintaining a “buy” rating.
Risk warning
Gold prices fluctuated greatly; project construction fell short of expectations; the company's Kejin cost growth exceeded expectations, etc.