We maintain the investment rating for China Gold International (the "Company") as "Accumulate", with TP of HK$32.06. Our TP represents 17.6x 2023 PER, 6.2x 2024 PER and 5.5x 2025 PER. We expect gold price to continue to rise in 2023, which will lift profitability of the Company.

We expect gold price to continue to rise and China Gold International's net profit to gold price is highly elastic. The US Federal Reserve is approaching the terminal point of interest rate hike, which will significantly relieve the pressure weighing on gold price. As the US inflation is improving while macro economy is still under great pressure, we believe the time of interest rate cut may come soon. We believe the attractiveness of gold assets is growing and investment demand for gold assets may grow largely in the cycle of interest rate cut. As the Company's production costs of mined gold are relatively high, net profit of the Company has become more elastic to gold price. We believe that the Company will benefit more when gold price rises.

We believe the suspension of the Jiama Mine is provisional. The production of the Jiama Mine has been suspended since March 27, 2023 due to an overflow accident of its tailing pond. The Company is adopting active measures to promote the resumption of production of the Jiama Mine. The dam's repair and major reinforcement works have been completed by now and some reinforcement works are still in the final stage. We believe that total mined copper output will decrease by about 30,000-40,000 tons in 2023, and total mined gold output will decrease by 35,000-45000 oz in 2023. We believe the suspension of the Jiama Mine is provisional and the Company will try its best to compensate output loss after the Jiama Mine resumes production.

Catalyst: Rise in gold price.

Risks: Decline in gold price; gold and copper mine production impact from external factors.