Revenue increased significantly in 2023, and net profit to mother increased 78.21% year over year. In 2023, the company achieved revenue of 7.221 billion yuan, an increase of 15.23%; net profit to mother was 804 million yuan, an increase of 78.21% year on year; net profit after deducting non-return to mother was 866 million yuan, an increase of 115.97% year on year. Among them, Q4 achieved net profit of 284 million yuan, a year-on-year increase of 416.60%, a month-on-month increase of 36.63%, and net profit after deducting non-return to mother of 305 million yuan, an increase of 1556.64% over the previous year.
The cost ratio declined during the period, and the increase in gross profit led to an increase in performance. The company's net profit in 2023 was +353 million yuan year on year. The main profit increase was gross profit (+557 million yuan). At the same time, the company's expense ratio decreased by 1.15 pct, and annual sales expenses were -4.34% year over year, mainly due to the year-on-year decrease in labor costs and mechanical material consumption in Vientiane Mining sales in 2023; management expenses were -8.16% year-on-year, mainly due to the year-on-year decrease in group consulting fees and consultancy expenses in 2023; financial expenses were +40.67% year-on-year, mainly due to the increase in the company's interest-bearing liabilities in 2023. This is due to an increase in interest expenses due to rising interest rates on US dollar loans.
Production has been rising steadily, and the results of reducing costs and increasing efficiency have been good. In 2023, the company's gold/copper sales volume was 14.51 tons/0.65 million tons, a year-on-year change of +4.55%/-3.13%, benefiting from the rise in gold prices and the company's cost reduction measures. The gross margin of the company's gold products was +8.05pct year on year. Judging from the full maintenance cost of gold per unit, Vientiane Mining was 1,330 US dollars/ounce, -9.95% year over year, Venus Sava 1197.13 US dollars/ounce, year-on-year change of -27.23%, at home and abroad. The decline in mine costs has improved markedly. The grade of ore subject to electrolytic copper declined significantly compared to the previous year, with a gross margin of -28.15 pct year over year. According to the company's annual report guidelines, gold production and sales are expected to be 16.02 tons in 2024, with annual revenue of 8.8 billion yuan and net profit attributable to the parent company of 1.1 billion yuan. The growth target is clear.
Resources continued to be deployed, and the project progressed steadily. In terms of prospecting and storage, domestic mining subsidiaries continued to step up their geological prospecting efforts in 2023, adding 996,000 tons of geological gold ore resources and 5.3 million tons of gold ore resources for the Saipan mine. The annual report shows that the company's mines hold about 450.32 tons of gold resources and metals. In terms of project construction, the company completed the construction of the Wulong Mining Underground Development Project and the Jintai Mining Project in 2023. The above projects are expected to contribute to the increase in production in 2024. Subsequent expansion projects such as Geelong Mining, Wasa Mining, and Vientiane Mining are also expected to further bring about the company's growth. Furthermore, the development of rare earth resources in Laos is progressing smoothly. According to the company's plan, rare earth oxide production is expected to reach 3,700 tons in 24, further increasing performance.
Profit forecast and investment advice: The net profit for 2024-2026 is expected to be 1,499/17.68/19.66 billion yuan, respectively, and PE corresponding to the closing price on April 3 is 20/17/15 times, respectively. The company's gold and rare earth businesses are growing. Domestic Wulong and Geelong mines are actively expanding production capacity, and overseas Saipan mining and Wasa mining are continuously promoting cost reduction and efficiency. Considering that profitability is expected to increase after gold prices rise, and the company's future gold production is expected to continue to grow, maintaining the “recommended” rating.
Risk warning: risk of gold price fluctuations, risk of production safety, risk of production capacity construction falling short of expectations