In 2020, the company realized a net profit of 366 million yuan, an increase of 19.89% over the same period last year. After entering the Jiang Copper Group system, the company further optimizes the financial structure through equity financing to slow down the liquidity pressure of the company. The company has industry-leading gold smelting technology, with the high-purity new material projects and mining projects have been put into production, the steady growth of all kinds of metal production will help the company's long-term performance release. Considering the downgrade of gold price expectations and the impact of asset impairment on the company's short-term performance, the rating was downgraded to "overweight".
In 2020, the company realized a net profit of 366 million yuan, which was + 19.89% compared with the same period last year. The company realized operating income of 36.053 billion yuan in 2020, + 26.34% year-on-year; net cash flow from operating activities of 194 million yuan,-62.51%; net profit of 366 million yuan, + 19.89%; and net profit of 463 million yuan, + 16.04% of the same period last year. The increase in performance was mainly due to: 1) increased sales and higher prices of gold, silver and electrolytic copper, the main products of the period, and 2) increased metal trading business of subsidiaries Hengbang Trading Co., Ltd. And Shanghai Qianbang International Trading Co., Ltd.
R & D and technological renovation projects have been put into production one after another, and self-production business has achieved steady growth. The company achieved gold output of 47.90 tons in 2020, of which self-produced gold was 25.79 tons, + 49.59% compared with the same period last year; silver output was 801.54 tons, + 31.15% over the same period last year; electrolytic copper output was 154200 tons, + 30.02% year-on-year; and sulfuric acid was 1.2463 million tons,-9.60% compared with the same period last year. In addition, the first phase of the company's high-purity new materials development and industrialization project has been successfully put into production, with an annual output of 10 tons of 6-7N high-purity arsenic demonstration production line, the output of qualified 7N high-purity arsenic products, has carried out market sales, laid the foundation for the company to create and develop new advantages. In 2020, the construction project of boundary expansion and capacity expansion of Liaoshang Gold Mine completed the preliminary preparatory work, which laid the foundation for further increasing the output of self-produced gold.
After entering the system of Jiang Copper Group, the company further optimizes its financial structure through equity financing. With the support of the controlling shareholders, the company completed a non-public offering of shares in 2020, raising 2.5 billion yuan, reducing the pressure on the company's liquidity, and the company's asset-liability ratio dropped to 58.2%, down 13 percentage points from the same period last year, laying the foundation for the follow-up development of the enterprise. The interest expense of the company in 2020 is 346 million yuan, compared with the same period of last year-7.29%. The interest expense of 4Q20 is 67 million yuan, and the year-on-year / month-on-month ratio is-41.19% and 27.10%.
Risk factors: the risk of price fluctuations of major products; the company's project construction schedule is not as expected.
Investment advice: the company benefits from the increase in the production of its own gold mines and is expected to grow into a medium-sized gold mining company in the future. According to our latest gold price expectations and cost assumptions, the net profit forecast of the company belonging to the parent company from 2021 to 2023 is 448,000,000 yuan (the original forecast value of 21x22 is 674x878 million), and the corresponding EPS is 0.390.460.57 yuan (the original forecast for 2122 is 0.740.96 yuan). The downgrade of gold price expectations and the impact of asset impairment on short-term performance was downgraded to "overweight" rating.