YINTAI GOLD(000975)：1Q24 PREANNOUNCEMENT BEATS; QUARTERLY RECORD EARNINGS LIKELY-格隆汇

机构：中金公司
研究员：Ding QI/Can ZENG/Yan CHEN

　　Preannounces 1Q24 attributable net profit up 61.94-75.43% YoYYintai Gold preannounced that its attributable net profit in 1Q24 likely rose 61.94-75.43% YoY and 56.86-69.93% QoQ to Rmb480-520mn, and recurring net profit grew 69.46-83.73% YoY to Rmb475-515mn, beating our expectations. We attribute this to higher-than-expected sales volume.
　　Trends to watch Mine operations solid; possible record quarterly earnings driven by rising sales volume and prices. Gold ASP at the Shanghai GoldExchange rose 16% YoY and 4% QoQ to Rmb489/g in 1Q24, hitting another new high. Moreover, the firm's sales volume increased YoY in 1Q24. Yintai Gold plans to raise its gold production by 9% YoY to at least 8t in 2024.
　　Organic growth and M&A both underway. The firm announced itsstrategic plan for the next seven years, aiming to increase gold output and gold resource reserves by 63% and 53% vs. 2023 to 12t and 240t by the end of the 14th FYP period, and by 104% and 91% vs. 2023 to 15t and 300t by end-2026.
　　Global expansion underway. The firm’s acquisition of Canadian mining company Osino Resources Corp in February 2024 marked the first step towards global resource expansion. The firm expects Osino Resources Corp's core projects to reach full capacity (5t/yr) in 2026, with all-in sustaining costs at only US$1,011/oz.
　　Acquisition of mineral resources accelerated. In March 2023, the firm’sgold mine Heihe Luoke obtained the exploration rights for Dong'an gold mine, which could help ensure the sustained supply of gold resources. In December 2023, Yulong Mining's 1118 Highland Expansion Project passed regulatory review, and its service life could be extended significantly. As of end-2023, the firm had obtained the mining certificate for Qinglonggou mine, and the Natural Resources Department of Qinghai Province had completed review of its application for the mining rights of the newly launched Xijinggou mine, boding well for the accelerated expansion of its mineral exploration and reserves.
　　Average gold price likely rising; remain upbeat on its investmentvalue. After the US reported higher-than-expected non-agricultural employment in March, gold trading stimulated by an interest rate cut may　decline over the near term. However, geopolitical uncertainty has dampened the market’s risk appetite, and gold prices have consistently hit record highs. The COMEX gold price at its highest reachedUS$2,384.5/oz on April 9.
　　Over the long term, as de-dollarization continues, central banks around the globe will remain net buyers of gold. Their net purchase ofgold in 2023 reached 1,037.4t, still above 1,000t. As of end-March, the People’s Bank of China has been purchasing gold for 17 consecutive months, with total gold reserves at 2,262t, the highest since 1949.
　　Moreover, the gold share of reserves rose from 3.19% in October 2022 to 4.64% in March 2024. We are firmly optimistic about the investment value of gold.
　　Financials and valuation
　　We leave our earnings forecasts unchanged. We maintain an OUTPERFORM rating and our target price of Rmb21.5, implying 30x 2024e and 23x 2025e P/E, offering 17.2% upside. The stock is trading at 25.5x 2024e and 19.6x 2025e P/E.
　　Risks
　　Disappointing progress in M&A and/or gold prices; sharper-than-expected rise in costs.