Incident: The company disclosed its report for the third quarter of 2024, and its performance grew rapidly. The company's Q3 revenue in 2024 was 21.232 billion yuan, +52.77% year over year; net profit to mother was 0.682 billion yuan, +46.62% year over year; net profit without return to mother was 0.68 billion yuan, +70.69% year over year. The company's Q1-Q3 revenue in 2024 was 67.006 billion yuan, +62.15%; net profit to mother was 2.066 billion yuan, +53.57% year over year; net profit after deducting non-return to mother was 2.094 billion yuan, +63.57% year over year.

Gold prices continue to rise, which is expected to drive the company's performance. As of October 28, 2024, the spot price of gold on the Shanghai Gold Exchange had risen to 624.28 yuan/gram. In terms of quarterly prices, the 2024 annuity price rose quarterly, and the average spot price on the Shanghai Gold Exchange in Q3 2024 was 569.13 yuan/gram. As of October 28, 2024, the average spot price on the Shanghai Gold Exchange rose to 610.37 yuan/gram in the fourth quarter. Gold prices continue to rise, which is expected to drive the company's performance.

The company's resource prospecting continues to advance, and many projects are progressing smoothly. In the first half of 2024, the company invested a total of 0.31 billion yuan in prospecting capital, completed the prospecting project volume of 0.33 million meters, and achieved an additional 21.9 tons of gold metal in prospecting; completed the 70% share merger and acquisition of Baotou Changtai Mining, which added more than 16 tons of gold metals and added a mature mine in production; successfully injected prospecting rights into the company to achieve integration with the Sanshandao Gold Mine mining rights. The construction progress of the project continued to be accelerated. A total of 0.4526 million cubic meters of construction was completed in the first half of the year, with borehole construction of the Sanshandao Gold Mine sub-well project breaking the elevation of 1,590 meters, setting a new record for the deepest deep well in Asia; the main well in the Xincheng Gold Mine I mining area was put into use according to the planned node; the construction of the 2000 ton daily capacity expansion project of the Chifeng Diesel Mining Project was completed ahead of schedule; construction of key projects such as the beneficiation plant and tailings depot for the Katino project in Ghana all exceeded the planned schedule. The pace of warrant processing continues to be accelerated. A number of warrants and related approvals were obtained in the first half of the year. Among them, the Sanshandao Gold Mine obtained an integrated 15,000 tons/day mining license, and the Yinan Gold Mine Gold Division Deep Expansion and Capacity Expansion Project obtained a mining license.

Profit forecasting and valuation. Since the company's revenue growth rate in the first three quarters was higher than the profit growth rate, and the rise in gold prices fell short of expectations. We adjusted the company's profit forecast. We predicted that the company's 2024-2026 revenue would be 87.095/95.221/101.398 billion yuan, respectively, and the net profit to mother would be 3.3/4.573/6.767 billion yuan, corresponding to PE36.88/ 26.62/17.99 times PE. As a leading company in national production, the company is expected to combine the “14th Five-Year Plan” production target of the group company Take full advantage of the profits brought about by the high gold price cycle and maintain a “buy” rating.

Risk warning: The increase in the company's mineral gold production fell short of expectations; the increase in the company's gold cost exceeded expectations; the decline in gold prices exceeded expectations