On the evening of July 8th, Zijin Mining, a leader in the mining industry, released its performance forecast for the first half of 2024, which is quite impressive in both absolute terms and growth rates.
The company estimates that for the first half of 2024, it will achieve a net profit of approximately 14.55 billion to 15.45 billion yuan, a year-on-year increase of about 41% to 50%. The net profit after deducting non-recurring gains and losses is also roughly the same, with a year-on-year growth rate as high as 54% to 63%. The main reasons for this high double-digit growth in performance may be more due to the rise in prices of related mineral products. Over the past year, international gold and copper prices have both increased by more than 20%.
So far this year, Zijin Mining's stock price has also recorded a significant increase. As of the close on July 8th, its year-to-date increase has reached 50%, with a market value approaching 500 billion yuan.
In the first half of the year, the volume and price of gold, copper, and other mineral products rose together.
Zijin Mining's announcement shows that, according to preliminary calculations by the company's financial department, it is expected to achieve a net profit attributable to shareholders of the listed company of about 14.55 billion to 15.45 billion yuan for the first half of 2024. Compared with 10.302 billion yuan in the same period last year, it will increase by about 4.248 billion to 5.148 billion yuan, a year-on-year increase of about 41% to 50%.
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At the same time, the company estimates that for the first half of 2024, it will achieve a net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses of about 14.85 billion to 15.75 billion yuan. Compared with 9.655 billion yuan in the same period last year, it will increase by about 5.195 billion to 6.095 billion yuan, a year-on-year increase of about 54% to 63%.
It is worth noting that the net profit and net profit after deducting non-recurring gains and losses for the first quarter of the company were 6.261 billion yuan and 6.224 billion yuan, respectively, a year-on-year increase of 15.05% and 15.92%, respectively. Compared with the semi-annual data, it means that Zijin Mining's net profit for the second quarter of this year is close to 9 billion yuan, which is expected to double compared with 4.86 billion yuan and 4.286 billion yuan in the second quarter of 2023, and the company's performance accelerated significantly in the second quarter.
Regarding the reasons for the expected increase in performance in the first half of the year, the announcement disclosed that there are mainly two aspects.
First, the output of major mineral products increased year-on-year during the reporting period: the company's gold ore production was about 354 tons, a year-on-year increase of 9.6% (32.3 tons in the same period last year); copper ore production was about 518,000 tons, a year-on-year increase of 5.3% (492,000 tons in the same period last year); silver ore production was about 2,103 tons, a year-on-year increase of 1.3% (2,076 tons in the same period last year).
Second, the selling prices of gold ore, copper ore, and silver ore increased year-on-year during the reporting period. The company did not disclose the specific increase in prices of related mineral products, but judging from the international gold price and international copper price since the beginning of last year, the increase is obvious. At the beginning of 2023, the international gold price was still $1,830 per ounce, and the current latest price is close to $2,384 per ounce, an increase of 30%, of which the increase this year alone has exceeded 15%. The increase in international copper prices is also remarkable.Looking at the 2023 annual report, Zijin Mining's two main sources of revenue are copper and gold from mining. In 2023, their respective revenue shares were 25% and 42%, with gross profit contributions of 47% and 25%. The gross profit margins for copper and gold production were 55% and 45%, respectively.
During the year, A-shares rose by 50%, and H-shares rose by 40%.
Information shows that Zijin Mining is a large multinational mining group engaged in the exploration, development, engineering design, and technical application research of copper, gold, zinc, lithium, and other metal mineral resources worldwide, with listings on both H-shares and A-shares. By the end of 2023, the company had 30 mining resources in 16 countries around the world, making it the world's 5th largest copper production company, 7th largest gold production company, and 4th largest lead (zinc) production company.
Looking back, Zijin Mining's rapid development is inseparable from the deep support of the capital market.
Zijin Mining went public on the Hong Kong H-shares in 2003 and Shanghai A-shares in 2008. It then completed three rounds of A-share refinancing from 2017 to 2020, providing strong financial support for Zijin Mining's last round of international development. During this period, Zijin Mining achieved significant strategic investments, mergers, and acquisitions, and construction and development of projects such as the Cukaru Peki copper-gold mine in Serbia, the Kamoa copper mine in the Democratic Republic of Congo, and the Kolwezi copper (cobalt) mine, building a powerful engine for leapfrog growth.
As a model of common development in the capital market, while leveraging the capital market for rapid development, Zijin Mining has also given investors substantial returns through actual increases in market value. On the basis of A-shares and H-shares' stock prices rising against the trend by 27% and 23% in 2023, respectively, the stock prices in 2024 are even more robust, with A-shares and H-shares' stock prices rising by about 50% and 40% year-to-date.
Based on Zijin Mining's closing price of 18.64 yuan per share on July 5, it is equivalent to 6 times the non-public offering price of 3.11 yuan per share in 2017, 5.5 times the public offering price of 3.41 yuan per share in 2019, and 2.7 times the convertible bond conversion price of 7.01 yuan per share in 2020.
In addition, Zijin Mining also highly values cash dividends as a way to reward investors. Since its H-share listing in 2003, the company has achieved a cumulative net profit of 111.2 billion yuan, with a cumulative dividend amount exceeding 45.2 billion yuan, and a cash dividend payout ratio of 40.6%.