Recently, the market sentiment of gold has always remained at a high position. On the one hand, the spread of the epidemic has added more uncertainty to the future global economic situation; on the other hand, geopolitical tensions have not been fundamentally alleviated, and market worries remain. In this context, investors are very willing to be bullish and bullish on gold for the purpose of anti-inflation and risk aversion.
Gold has the dual attributes of assets and commodities, and the medium-and long-term time dimension is still in the excellent window of investor strategic allocation. As far as the target of the secondary market is concerned, Zhaojin Mining (01818), which has more prominent resource endowment, may be the focus of investors.
A few days ago, Zhaojin Mining disclosed its 2021 results. During the reporting year, the company achieved an income of 6.859 billion yuan (RMB, the same below) and a net profit of 191 million yuan.
External factors disturb fundamentals
In terms of core financial data, Zhaojin Mining performed poorly in 2021, with revenue and net profit falling to varying degrees.
It is reported that the negative growth of Zhaojin Mining performance is mainly due to a sharp decline in gold production compared with the same period last year. In 2021, the company's total gold output was 23657.2 kg, down about 33.58% from the same period last year. Of this total, mineral gold was 12623.52 kg, down about 37.19% from the same period last year; smelting and processing gold was 11033.68 kg, down about 28.9% from the same period last year.
In terms of business structure, gold mining has always been the pillar business of Zhaojin Mining. In 2021, the company's gold mining business achieved income of 5.915 billion yuan, accounting for 86.23% of the annual income. Because of this, the reduction of gold production has caused a great disturbance to the performance of Zhaojin Mining.
It should be pointed out that Zhaojin Mining is not the only company that reduced production in that year. According to the China Gold Association, China's gold production in 2021 was 328.93 tons, down 9.95 per cent from the previous year. The main reason behind the pressure on the industry to reduce production is the periodic suspension of production in Shandong and Henan, two major gold production provinces during the year.
Take Shandong Province, where Zhaojin Mining is located, as an example, Shandong Province carried out a large-scale inspection and rectification of production safety during the year. In addition, Yantai City carried out clean-up and rectification of non-coal mines within its jurisdiction, resulting in a superposition of multiple external factors, causing no small disturbance to mining enterprises, including Zhaojin Mining.
However, the good news is that by the end of the third quarter of 2021, the enterprises in Zhaojin Mining Port have fully restored their licensed capacity, and the company's production situation has returned to good development.
In addition to the limited production of gold, the high volatility of gold prices in 2021 is also unfriendly to related companies. Looking back at the trend of gold prices for the whole of last year, it can be said that there were twists and turns: at the beginning of the year, due to the sharp rise in US bond yields, gold prices fell from their early high of $1950 / oz to as low as $1676 / oz; since then, the Fed continued to release water in inflation expectations, and gold prices bottomed out and rebounded again to break through $1900 / oz; in June, the Fed issued a hawkish signal and gold prices fluctuated downwards. In the second half of the year, the Federal Reserve expected to raise interest rates from time to time to impact the gold price, while the inflation situation to support the gold price, against the background of rising long-short differences in the market, gold fluctuated widely in the range of 1700-1900 US dollars / oz.
According to data from the Shanghai Gold Exchange, the annual average price of 9995 gold in 2021 was 373.94 yuan / g, down 3.18% from the same period last year.
Taken together, the overall trend of gold prices in the reporting year showed high volatility, but it had little impact on Zhaojin Mining's performance, but the company's annual report "report card" was not satisfactory because of the policy impact that disturbed the company's production in the first three quarters.
Short-term profit is exhausted and long-term growth is emphasized.
Although the performance of Zhaojin Mining is not satisfactory in the past year, considering that the disturbance factors are mainly external factors and the disadvantages have been exhausted, investors can be optimistic about the company's future operation and performance at this stage.
After combing through the APP of Zhitong Finance and Economics, it is found that Zhaojin Mining has a very strong investment value, no matter from the macro point of view, or from the micro point of view of the enterprise itself.
First of all, from the macro point of view, as mentioned at the beginning of the article, gold has the dual attributes of assets and commodities. Under the background of long-term low global real interest rates, high inflation and external geopolitical risks, gold will be easy to rise and difficult to fall.
After entering 2022, although the Fed begins the cycle of raising interest rates under domestic inflationary pressures, taking history as a lesson, gold may not be afraid to raise interest rates to continue to strengthen against the trend. According to the report of East Asia Qianhai Securities Research Institute, the price of gold has risen in half of the six interest rate increases in the United States since 1980, and during the 2004-2006 interest rate hike, COMEX gold rose by 49.43%. It can be seen that the Fed's rate hike does not mean that the price of gold will definitely fall back.
Combined with the current international economic situation, the Fed's interest rate hike cycle may not stop the historic upward trend of gold prices. First of all, the current global macro-economy is relatively fragile, and continuous and substantial interest rate increases are bound to seriously interrupt the pace of economic recovery; second, in the context of high inflation, interest rate increases may not have an essential impact on inflation; finally, interest rate increases are expected to be digested by the market in advance, and the actual trend of gold may be stronger than expected after interest rate increases hit the ground.
Looking back at Zhaojin Mining itself, the company has no lack of medium-and long-term points: first, in terms of production capacity, as mentioned earlier, the production capacity of Q4 Zhaojin Mining has been fully restored in 2021, and production and operation is on the right track. According to the data, the company's mineral gold output increased by 36.7% month-on-month in the second half of 2021, with obvious signs of warming up. Considering the low base in 2021, Zhaojin Mining, which is "light" this year, is expected to achieve significant year-on-year growth in both production capacity and performance.
Second, 2022 will be the construction year of the gold project in Zhaojin mining area, and there is room for the company to double its output in the next five years. It is reported that at present, the company's sea area gold mine has successfully obtained the mining license, completed the environmental assessment reply, and the safety facility design has also been reviewed and approved. The gold mine is expected to reach production in 2025, with a production capacity of 16 tons per year.
"the past cannot be remonstrated, but those who come can still be pursued." In the secondary market, which attaches importance to future growth expectations, compared with short-term performance fluctuations, long-term performance potential is more worthy of investors' attention.
Considering the current macro aspect and the development of the enterprise itself, Zhitong Financial APP believes that under the current background, gold is in an excellent allocation window period, and gold prices are easy to rise and fall in a long-term period; in the business cycle, as a gold giant, the Zhaojin mining industry has excellent resource endowments and high certainty for future growth, which can be used as a target for investors to focus on tracking.
