Q3 net profit to mother was 9.273 billion yuan, up 5.09% year-on-month

The company released its three-quarter report on October 18, '24. In 2024, Q1-Q3 achieved operating income of 230.396 billion yuan, YOY 2.39%, net profit of 24.357 billion yuan, YOY 50.68%, Q3 revenue of 79.98 billion yuan, YOY 7.11%, up 5.74% month on month, net profit to mother of 9.273 billion yuan, YOY 58.17%, up 5.09% month over month, once again creating the best single quarter results in history.

Production: The month-on-month increase in copper and gold production supports profit

In Q1-Q3 2024, the company's mineral gold production was 54.27 tons and mine copper 0.7895 million tons, which changed by 8.33% and 4.67% respectively compared with the same period last year; 2024Q3, the company's mineral gold production was 18.86 tons, up 1.39% from Q2, and mineral copper production was 0.2709 million tons, up 5.85% from Q2. While the price of gold and copper continues to be high, the company's production continues to be released, supporting a record high profit.

Cost: Q3 costs were basically flat month-on-month, reflecting excellent operating capability. Cost control is an important reflection of the mine's competitiveness. Since 2023, Zijin Mining has accelerated the construction of a global operation management system with Zijin's characteristics, tackled cost control in key areas such as overseas projects, and “cost control” work has gradually shown “efficiency gains”. In Q1-Q3 of 2024, the company's copper concentrate unit sales cost was 18,751 yuan/ton, a year-on-year decrease of 4.16%; the unit sales cost of gold concentrate was 155.06 yuan/g, a year-on-year decrease of 0.54%. In Q3 2024, the company continued to maintain excellent cost control capabilities, and all costs were basically the same as in 24Q2: the company's copper concentrate unit sales cost was 19,105 yuan/ton, up 2.64% month over month; the unit sales cost of gold concentrate was 161.85 yuan/g, up 3.31% month over month (overall cost control was still excellent, partly due to the month-on-month increase or due to the appreciation of RMB Q3). Against the backdrop of continued geopolitical turbulence and rising national resourcism, it is invaluable for companies to actively reduce costs and increase efficiency, control costs and release profits. We believe that excellent cost control capabilities can reduce profit fluctuations caused by commodity price fluctuations, and is an important force for mining companies to improve valuations. Zijin Mining's ability to control costs has been continuously verified, and it is expected that the valuation level will increase in the future.

Acquiring the Akyem gold mine in Ghana, further advancing the global layout

On October 9, 2024, Jinyuan International, an overseas wholly-owned subsidiary of Zijin Mining, plans to invest 1 billion US dollars to acquire 100% interest in the AkyeM gold project in Ghana held by Newmont Gold. The mine's gold production in 21-23 was 11.9/13.1/9.2 tons, respectively. The company expects that through further exploration, economic and technical re-evaluation, and technological transformation, there is room for further improvement in the project's resource reserves and output. The acquisition of Akyem Gold Mine is conducive to further increasing the company's gold sector's resource reserves, rapidly increasing the company's mineral gold production, and helping the company achieve its planned production targets for the next five years.

Profit forecasting

We expect that in 2024-2026, as gold and copper prices continue to be strong, Zijin Mining's various projects will be steadily put into operation, and cost control capabilities will continue to be verified. The operating income of Zijin Mining is expected to be 348.369/358.282/372.143 billion yuan. YOY is 18.73%/2.85%/3.87%, net profit to mother is 33.605/39.286/46.093 billion yuan, YOY is 59.12%/16.90%/17.33%, corresponding PE 14.41/12.33/10.51, maintaining a “buy” rating.

Risk warning

Copper and gold prices fell beyond expectations, and the company's project progress fell short of expectations, etc.