Investment advisory support|Yu Xiaoming, editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
Gold stocks continued to soar as gold prices climbed to an all-time high near $2,390 on April 12. Institutions believe that the historical trend of gold stocks and gold prices converges, but the elasticity is higher. Today, let's take a look at the company's investment logic.
Gold's rally is still strong
Gold naturally has safe-haven and anti-inflation attributes, and the core of hedging is the spillover impact of risk events on the global economy. The inflation resistance is reflected in the higher the risk rate, the higher the opportunity cost of holding gold. In the short and medium term, without the impact of larger-scale exogenous risk events, gold is still mainly related to the US dollar credit system, and there is an obvious negative correlation between gold and US real interest rates, and the real interest rate framework still has a strong explanation for the trend of gold prices.
Gold stands at the starting point of a medium- to long-term bull market, and de-dollarization is the underlying logic
From the perspective of the big cycle (divided into three major cycles from 1971 to the present), compared with the second gold bull market, there is a high probability that it is in the middle and early stages of the gold bull market, with the expectation of interest rate cuts, high inflation, and the downward dollar index on the macro level, and the background of de-dollarization and decentralization of countries around the world. In the small cycle (2-3 years), the US dollar and US Treasury yields are down, and real interest rates may enter a downward cycle, superimposed on the safe-haven demand generated by geopolitics. Gold is currently in the middle of the small cycle model upward phase, and has already experienced the first round of start-up brought about by the Sino-US trade friction and the slowdown in global economic growth, and is gradually moving towards a new high.
Gold could run above $2,400 per ounce
Taking the CPI and PPI data of 1982=100 as the fixed base point, the corrected values of the fixed basis coefficient of gold and CPI and PPI are obtained. After restoring the current inflation level, the highest point of the current gold elasticity can be obtained, which is $2,370.71 per ounce with reference to the 2021 CPI basis point and $2,555.21 per ounce with reference to the 2021 PPI basis point.
Gold stocks and gold prices have historically trended in the same way, but with greater resilience
At the beginning of the current gold rally cycle, gold stocks are about 2.23 times more resilient than the gold price. Gold stocks and gold prices are moving in much the same way, which is basically in line with historical trend fitting. We believe that the release time of corporate gold profits lags behind the performance of commodities, so there is a phased divergence between the performance of the equity market and the commodity market. However, as the price of gold continues to rise, the release of profits after the repair of gold equity balance sheets will be smoother.
Today, let's take a look at the company's investment logic:
1. The company is committed to building a domestic gold processing and smelting "aircraft carrier", and has built the first 10,000-ton processing and smelting plant in China, and the daily processing and smelting capacity has doubled.
2. The rise in volume and price helped the company's performance to be released, and the company continued to increase reserves and expand production, with outstanding resource advantages.
3. The institution believes that the performance of Shandong gold is outstanding, and the gold leader is riding the wind.
Introduction and main business of Shandong Gold
The main production and operation entities of Shandong Gold Company are Xincheng Gold Mine, Jiaojia Gold Mine, Linglong Gold Mine, Sanshandao Gold Mine, Yinan Gold Mine, Pingdu Xinhui Gold Mine and many other well-known large and medium-sized mines at home and abroad. In addition to owning the mining rights of well-known mineral deposits in Yantai, Qingdao, Linyi, Weihai and other provinces, the company has also obtained the mining rights in Chifeng area of Inner Mongolia through mergers and acquisitions, which has enabled the company to achieve a substantial increase in gold reserves. The company is committed to building a domestic gold beneficiation and metallurgical "aircraft carrier", and has built the first domestic 10,000-ton beneficiation and metallurgical plant, and the daily metallurgical capacity has been doubled. The company continues to introduce high-tech and scientific research achievements at home and abroad, and gradually increase the cultivation and exercise of independent innovation ability, through the postdoctoral workstation "nesting and attracting phoenix", and cooperation with well-known domestic scientific research institutions, etc., so that the transformation of talent training and scientific research achievements has been further accelerated, and has taken the lead in carrying out research on ultra-deep well mining technology, information mine construction, gold mine safety management system, green mine and other topics in China, and gradually improved the industrial chain of gold mining, metallurgy, scientific research and gold finishing.
The concept of Shandong gold stocks
Gold Concept, Shandong Plate, AH Shares, HS300_, Scarce Resources, Pre-profit and Pre-increase, Margin Trading, SSE 180_, State-owned Enterprise Reform, Shanghai-Hong Kong Stock Connect, Securities Holdings, Precious Metals, Depreciation Benefits, MSCI China, FTSE Russell, Standard & Poor's.
What is the status of Shandong's gold industry?
In terms of operating income, Shandong Gold ranks 11th in the industry higher than the industry average.
What is the basic situation of Shandong gold stock issuance?
The total share capital of Shandong Gold Stock is 4.473 billion shares, of which 3.614 billion A shares are in circulation. As of April 11, the total market capitalization was 139.884 billion yuan, the circulating market value was 113.024 billion yuan, and the price-earnings ratio was 60.09. The number of shareholders is 138,600. The largest shareholder is Shandong Gold Group Co., Ltd., with the top ten shareholders accounting for 71.28% of the shares.
What about the financial data of Shandong Gold stocks?
The company released its 2023 annual report, achieving revenue of RMB59.28 billion, +17.8% year-on-year, net profit attributable to the parent company of RMB2.33 billion, +86.6% year-on-year, and net profit attributable to the parent company of RMB2.21 billion, +69.5% year-on-year. Among them, the net profit attributable to the parent company in Q4 was 980 million yuan, +111.4% month-on-month; The net profit deducted from the non-attributable parent company in Q4 was 930 million yuan, +134.7% month-on-month.
As of December 31, 2023, the operating income of the gold industry by industry was 56.8 billion, with a revenue ratio of 95.82%. In terms of products, the operating income of purchased synthetic gold was 25.234 billion, and the revenue ratio was 42.57%. Pay attention to Jufeng Investment Advisor (jfinfo)/good stock application, and the analysis and research report of the leading target of "Institutional Research and Selection" is waiting for you to get!
Executive Profile:
Li Hang: male, Han nationality, born in January 1970, on-the-job graduate student, doctor of management, postdoctoral fellow in economics, senior accountant, national accounting leading talent, Taishan industry leading talent, Shandong Province service industry professional. He used to be the deputy director of the finance department of China Qingqi Group Co., Ltd., the director and supervisor of Jinan Qingqi Motorcycle Co., Ltd., the director of Pakistan Segal-Qingqi Motorcycle Co., Ltd., the deputy director of the finance department (presiding over the work), the director of the finance department, the director of the planning and finance department and the chief accountant of Shandong High-speed Group Co., Ltd., and successively served as the chairman of Shandong High-speed Everbright Control Industry Investment Fund Management Co., Ltd., the chairman of the board of directors of China New Finance Group Co., Ltd., and the secretary of the Party Committee of Shandong Bohai Bay Port Group Co., Ltd. Chairman of the Board, Member of the Standing Committee of the Party Committee and Director of Shandong High-speed Group Co., Ltd. (before the reorganization), Member of the Standing Committee of the Party Committee and Deputy General Manager of Shandong High-Speed Group Co., Ltd. (after the reorganization), Member of the Standing Committee of the Party Committee, Deputy General Manager and Chief Auditor of Shandong High-Speed Group Co., Ltd. He is currently the deputy secretary of the Party Committee, director and general manager of Shandong Gold Group Co., Ltd.
Southwest Securities: Shandong gold performance is outstanding, and the gold leader is riding the wind
The rise in volume and price helped the company's performance to be released
Price: The average price of gold in London in 2023 is 1,942 US dollars / ounce, +7.8% year-on-year, and the average spot price of gold on the gold exchange is 450 yuan / gram, +14.7% year-on-year. Volume: In 2023, the company's mineral gold output will be 41.8 tons, a year-on-year increase of +8.0%, of which the production systems of Sanshandao Gold Mine, Xihe Zhongbao Company and Jinzhou Company will be gradually optimized, and the production capacity will be improved, the Dongfeng mining area of Linglong Gold Mine will resume work and production, and the acquisition of Yintai Gold will increase production. The Company's raw ore incoming grade was 1.29 g/t (excluding Yintai Gold data), an increase of 0.06 g/t year-on-year, of which the raw ore incoming grade of underground mines was 1.88 g/t, an increase of 0.04 g/t, or 2.2% year-on-year, mainly due to the reduction of loss rate and dilution rate and the increase of raw ore grade by optimizing mining methods, strengthening technical management and on-site management.
The company continues to increase reserves and expand production, with outstanding resource advantages
The company continues to increase reserves and expand production through various ways such as resource integration, active merger, resource injection, etc. According to the company's announcement in January 2024, it intends to acquire the exploration and prospecting rights of gold mines in Xiling Village, Laizhou City, Shandong Province, held by Shandong Gold Geology and Mineral Exploration Co., Ltd., a wholly-owned subsidiary of Shandong Gold Group, the controlling shareholder, with 592 tons of gold resources with an average grade of 4.02 g/t and recoverable reserves of 444 tons of gold with an average grade of 4.29 g/t. years, with a theoretical service life of 36 years, will contribute important forward increments to the company. In addition, the integration of the company's Jiaojia gold mine resources has been actively promoted, the construction of overseas Catino mines has been steadily promoted, and Yintai Gold has successfully achieved equity change, with outstanding advantages in gold resources.
Gold prices entered a period of upward movement on the right side
The long-term cycle remains optimistic about gold prices: the Federal Reserve's monetary policy is in a switching cycle, the pressure on economic growth increases, the long-end U.S. Treasury yields and the U.S. dollar cycle are still downward; the scale of U.S. debt has repeatedly reached new highs, and gold, as an alternative to credit currency, has increased intrinsic value; anti-globalization, the increase in global risk events, and the central bank's continuous gold purchases will drive the gold price center to continue to move upward.
Investment Opportunities:
Southwest Securities expects that the company's net profit attributable to the parent company from 2024 to 2026 will be 3.86 billion yuan/5.39 billion yuan/6.53 billion yuan respectively, and the corresponding PE will be 34/24/20 times respectively.
Enlightenment Today:
The most important thing is to see the stock as a small piece of ownership of the company, and judge the intrinsic value of the company by its competitive advantage. - Charlie Munger
Risk Warning:
The uncertainty risk of the Federal Reserve's interest rate cut, the risk of the persistence of inflation in the United States exceeds expectations, the risk of a sharp decline in precious metal prices, and the risk of untimely production of gold mining projects.
Source:
Shanghai Securities - Gold prices continue to rise, it is recommended to pay attention to the head brand of gold jewelry - 240407
Tianfeng Securities-In-depth Research on Metals and Materials Industry-Gold Topic: Witness of the Global Pattern-20240401
Southwest Securities-Shandong Gold-600547. SH-performance is outstanding, and the golden faucet is riding the wind - 20240401
Guojin Securities-Precious Metals Industry Research: Nuggets "Gold" Series (7): It is highly recommended to pay attention to the rising wave of gold stocks in Q2 - 20240401
(Investment advisory support: Yu Xiaoming, practicing certificate: A0680622030012)
Disclaimer: The above content is for reference only and does not constitute specific operation advice, and you shall operate at your own risk and profit and loss