The company released its 2024 three-quarter report

In the first three quarters of 2024, the company achieved operating income of 12.071 billion yuan, +70.14% year over year; realized net profit to mother of 1.727 billion yuan, +54.46% year over year; realized net profit after deduction of 1.786 billion yuan, or +64.21% year over year. Among them, Q3 achieved operating income of 5.567 billion yuan, +49.17% month-on-month, +120.65%; net profit to mother 0.652 billion yuan, +14.04% month-on-month and +69.99% year-on-year; net profit without return to mother 0.659 billion yuan, +5.13% month-on-month and +75.15% year-on-year.

Q3 Gold production and sales progressed steadily, and the sales cost of gold continued to decline: in 24Q3, the average price of Shanghai Gold was 571.18 yuan/gram, +24.24% year over year, and the average price of Shanghai Bank was 6659.29 yuan/kg (excluding tax), +30.75% year over year.

Volume: The company sold 6.51 tons of mineral gold in the first three quarters of 2024, of which Q3 was 2.10 tons, -0.03 tons month-on-month; sales of mineral silver were 122.08 tons, of which Q3 was 47.95 tons, +3.46 tons month-on-month. The company produced 6.28 tons of mineral gold in the first three quarters of 2024, of which Q3 was 2.12 tons, -0.06 tons month-on-month; mineral silver production was 122.82 tons, of which Q3 was 40.58 tons, or -20.78 tons month-on-month.

Cost: In the first three quarters of 2024, the unit sales cost of gold was 142.80 yuan/gram, and the unit sales cost of silver was 2.75 yuan/gram. Compared with -3.73 yuan/gram and +0.05 yuan/gram in the first half of 2024, respectively, the unit sales cost of gold decreased further.

Osino shares were settled, and the subsidiary added mineral rights

Osino equity settlement completed: In February 2024, the company plans to acquire all of Osino Resources Corp.'s existing issued and circulating common shares and shares to be diluted in cash at a price of 1.90 Canadian dollars per share through a wholly-owned subsidiary set up in Canada by its subsidiary Hainan Shengwei Trading Co., Ltd. As of August 29, 2024, the settlement of this acquisition has been completed. Subsequent companies will apply for the delisting of Osino shares and complete the privatization of Osino. After the acquisition was completed, the company indirectly held 100% of Osino's shares, which were included in the scope of the consolidated statement. The acquisition increased the company's mineral resource reserves (which will add about 127.2 tons of gold resources).

The subsidiary added prospecting rights and mining rights: In August 2024, Jilin Banmiaozi Mining signed a “Mining Rights Concession Contract” with the Jilin Provincial Department of Natural Resources, and obtained survey prospecting rights for the Nanchacun Rock Gold Mine in Guosong Town, Tonghua County, Jilin Province. In September 2024, the holding subsidiary Inner Mongolia Yulong Mining's 1118 Highland lead-zinc mine prospecting rights were converted to mining rights.

Investment advice:

The company focuses on cost control, and the promotion of Osino's acquisition will help increase production in the long term. The price of gold has repeatedly reached new highs, and both volume and price have increased, and the performance growth rate is impressive. The estimated revenue for 2024-2026 is 15.987, 18.229, 20.457 billion yuan, and net profit of 2.337, 2.97, and 3.648 billion yuan, corresponding EPS is 0.84, 1.07, and 1.31 yuan/share, respectively. Currently, the corresponding PE price is 23.1, 18.1, and 14.8 times, maintaining a “buy-A” rating. The target price for 6 months is 23.5 yuan/share, corresponding to about 28 times PE in 24.

Risk warning: Demand falls short of expectations, metal prices fluctuate greatly, project progress falls short of expectations, and risk of acquisition failure.