Event: The company released its 2024 semi-annual report. In 2024, H1 achieved revenue of 4.627 billion yuan, up 34.24% year on year, net profit of 0.553 billion yuan, up 118.62% year on year; in a single quarter, 2024Q2 company achieved revenue of 2.698 billion yuan, up 50.45% year on year, up 39.83% month on month, net profit of 0.314 billion yuan year on year, up 114.98% year on year and 49.7% month on month. The results are basically in line with our expectations.

Analysis: The sharp rise in volume and price is the main driver of the new high profit. Volume: Gold sector: The company achieved gold production of 13.18 tons in 2024H1, up 11.98% year on year, of which mineral gold was 9.0 tons, up 6.86% year on year, and smelted gold was 4.18 tons, up 24.83% year on year; Copper sector: The company achieved copper production of 4082 tons in the first half of the year, an increase of 54.15% year on year, including 1,263 tons of mineral copper and 2,819 tons of copper smelted. Price: At the end of June, the fixed price of London spot gold was 23,301 US dollars/ounce, up 12.34% from the beginning of the year. The average price for the first half of the year was 2,202.91 US dollars/ounce, up 14.05% year on year. The closing price of Au9999 gold on the Shanghai Gold Exchange at the end of June was 549.88 yuan/gram, up 14.37% from the opening price at the beginning of the year. The weighted average price for the first half of the year was 514.12 yuan/gram, up 18.98% year on year. Cost: Due to increased gold production and cost control, 2024H1's comprehensive gold cost is about 209.99 yuan/gram, down about 2.18% from 214.67 yuan/gram in the first half of 2023. Profit: 2024H1 achieved gross profit of 1.977 billion, a year-on-year increase of 47.03%. Overall gross margin increased from 39% in the first half of 2023 to 42.72% in the first half of 2024. Other earnings: Due to the increase in the fair value of financial assets, the company achieved other income of 0.384 billion in 2024H1, an increase of 29.56% over the previous year.

Investment in exploration continues, and resource reserves are constantly being enriched. Based on continuous exploration of existing mines and joint promotion of epitaxial mergers and acquisitions, the company invested 0.123 billion yuan in geological exploration in 2023, and discovered an additional 33.83 tons of metal. By the end of 2023, the company had 1,185 tons of gold resources and 472 tons of recoverable reserves. In 2024, H1 completed geological exploration and invested RMB 0.042 billion, adding 14.31 tons of gold metals.

Key projects are progressing smoothly, and the West African market is being laid out. The company's key projects, led by the acquisition of Tietto Minerals Limited (Tietto), are progressing in an orderly manner as planned. At present, it has completed the acquisition of 100% of Tietto's shares and a controlling interest in the Comahon gold mine, and successfully completed on-site takeover to expand the company's overall layout in the West African mining market.

Offshore gold mines are about to be put into operation, and incremental contributions can be expected in the future. The company holds 70% of the shares in the offshore gold mine. The offshore gold mine has now fully entered the fast track of construction. The project is progressing smoothly. It is expected to be completed and put into operation in 2025. After completion, the estimated harvesting scale is 0.012 million tons/day, which can contribute 15-20 tons of gold per year after production. According to research reports, the total cost of Kejin is only 120 yuan/gram. The mine has excellent profitability. As the largest single gold mine in Asia, future development can be expected.

Profit forecast and investment advice: We expect the company's 2024-2026 net profit to be 1.009/1.395/2.678 billion yuan, respectively, and the PE corresponding to the August 23 stock price is 43/31/16 times, respectively. Considering that the offshore gold mine project has excellent profitability and is about to be put into operation, the combined increase in gold prices will drive an increase in profitability and maintain a “recommended” rating.

Risk warning: risk of gold price fluctuations, risk of production safety, risk of capacity construction falling short of expectations, etc.