Chifeng Gold (600988): Gold sector continues to expand into lead-zinc mines

Chifeng Gold (600988): Gold sector continues to expand into lead-zinc mines
The first three quarters of 2019 were merged into the Laos Sepon copper-gold mine, and the performance improved significantly.The company achieved operating income in the first three quarters of 201943.420,000 yuan, an increase of 183 in ten years.50%; net profit attributable to mother 1.3.6 billion, an increase of 60 in ten years.26%; deduct non-net profit1.36 ppm, an 87-year increase.49%; realized profit of 0.1 yuan, an annual increase of 66.67%.The first three quarters of performance growth mainly came from Laos’s Sepon copper-gold mine copper revenue consolidation.Single-quarter revenue in Q3 2019 is 16.910,000 yuan, an increase of 217 in ten years.32%; net profit attributable to mothers is 24.84 million yuan, an annual increase of 10.65%, down 51.65%, mainly due to a 2% drop in copper prices.13%, meanwhile, the company’s exchange loss profit and loss decreased by 65.05 million yuan. Sitting on high-grade gold mines, merged into overseas copper and gold mines to expand gold business.As of the end of 2018, the company has about 55 gold resource reserves.75 tons, with rare high-grade rich ore deposits in China. The average grade of a single mine is up to 15 g / ton. Under normal production conditions, the unit cost is less than 120 yuan / g.However, due to resource constraints and the impact of domestic security and environmental protection policies, mineral gold in 20181.52 tons, a decline of about 26% a year.Therefore, the company has been tapping existing mines in the past two years.Continue to increase the development of wells and lanes, strengthen exploration and increase reserves, and prepare for increased production of gold. In the past two years, gold mines have successively submitted and filed about 6 tons of gold reserves, and significant results have been achieved in prospecting. After the technical reformation of the mine is completed in the future,Gold 杭州桑拿 production is expected to be effectively increased.The second is the acquisition of overseas mines.The acquisition of a large copper-gold mine in Laos has effectively guaranteed the company’s resource shortage.According to the announcement, Sepon has a gold reserve of 32.8 tons, copper reserves 24.4 nominal.Sepon copper-gold mine currently produces 7 per year.5Cobalt ore is one of the largest mines in Laos. It is estimated that the mining of copper into the mine will be completed by 2020. The designed ore mining and processing capacity is 150 tons / year, and the annual output is about 5 tons.The company’s gold output is expected to increase in the future, and performance growth can be expected. The acquisition of domestic lead-zinc mines has rich reserves of lead-zinc-copper resources and ample room for additional reserves.According 杭州桑拿 to the announcement, the company took 5.Issued 100 million US dollars of shares to acquire 100% equity of Hanfeng Mining, and obtained 2 mining rights and 2 exploration rights from Dongfeng and Tateyama. The current production scale is 9.9 The lowest exchange rate / year, the performance promises that the non-deducted profit for 2019-2021 will not be less than 4,211, 5,088, and 60.4 million yuan, corresponding to about 12x PE in 2019.First, there are abundant mine reserves and guaranteed performance.According to the announcement, as of the end of 2018, the reserves of zinc, lead and copper resources held by Hanfeng Mining Dongfeng Mining Rights have reached 3 respectively.390 thousand metal tons, 0.200,000 metal tons, 0.410,000 metal tons; average grades are 3 respectively.38%, 0.24%, 0.38%; the reserves of zinc, lead and copper resources in Tateyama mining rights reached 11 respectively.310,000 metal tons, 6.680,000 metal tons, 1.170,000 metal tons, the average grade is 2 respectively.6%, 1.44%, 0.26%.Second, there is a large space for increasing reserves, and profitability is expected to further increase.According to the announcement, the two prospecting rights have already undergone deep exploration. According to the “Deep Exploration Plan for Lead-Zinc Polymetallic Ore in Tianbaoshan Mining Area, Longjing City, Jilin Province”, after all the exploration work is completed, it is expected to explore additional zinc resource reserves of 520,000 metal tons.Add molybdenum resource reserves 6.520,000 metal tons.As of the end of 2018, the census areas of large-scale prospecting rights are expected to have reserves of zinc, cadmium, gold, silver, and molybdenum reaching 14.500,000 metal tons, 0.120,000 metal tons, 0.38 metal tons, 42.10 metal tons, 1.940,000 metal tons.In the future, the company’s potential sustainable development capabilities are expected to significantly improve the company’s core competitiveness. Investment suggestion: Maintain the Overweight-A investment rating with a 6-month target price of 5.33 yuan.Assume 2019?The average price of gold in 2021 will be 315, 370, and 400 yuan / g, and we expect the company’s net profit attributable to the mother to be 2 in 2019-2021.5, 4.7, 7.80,000 yuan, the corresponding EPS is 0.18, 0.33, 0.55 yuan.Give 6-month target price of 5.33 yuan, corresponding to 30x PE in 2019. Risk warnings: 1) The price of gold and copper rises and declines; 2) The company’s self-produced gold growth is lower than expected; 3) The capacity climb is lower than expected.