Buffett ApprenticeZhaojin Mining annual report review: A gold stock worth watching
Since the beginning of 2024, international gold prices have been rising steadily, driving the strong performance of gold-related stocks. In fact, the rise in gold prices started in 2023, and the increase in 2024 has been relatively more significant.
Hong Kong-listed company Zhaojin Mining released its 2023 annual report on the evening of April 22.
The company had already announced its 2023 financial results earlier.
In 2023, Zhaojin Mining achieved operating revenue of 8.423 billion yuan, a year-on-year increase of 6.82%, and net profit attributable to parent company shareholders of 686 million yuan, a year-on-year increase of 70.77%.
The company's gross profit margin in 2023 was approximately 40.01%, an increase of about 6.33 percentage points compared to 2022.
In 2023, the company's gold business generated revenue of 7.672 billion yuan, up 7.77% year-on-year, while its copper business generated revenue of 301 million yuan, up 9.34% year-on-year. Driven by rising gold prices, the company's overall gross profit margin increased in 2023.
Since entering 2024, Zhaojin Mining's earnings have further improved.
On April 12, Zhaojin Mining announced its Q1 2024 results, showing that the company achieved operating revenue of approximately 1.981 billion yuan, a year-on-year increase of 13.94%, and net profit attributable to parent company shareholders of approximately 221 million yuan, a year-on-year increase of 124.3%. Basic earnings per share were 0.07 yuan.
As a major gold producer, Zhaojin Mining's performance is closely tied to fluctuations in gold prices.
Gold pricing is influenced by geopolitics and policies, and recent gold prices have continued to break records. The recent divergence in gold price movements from historical trends has further impacted market confidence. Unlike traditional commodities, gold, as a safe-haven asset, is more closely related to the U.S. economy, U.S. Treasury bonds, and the U.S. dollar exchange rate, with its price inversely correlated to real U.S. interest rates.
While gold prices have been rising, holdings of the SPDR Gold ETF, a key gold-related ETF, have declined, indicating that the surge in gold prices is not driven by large-scale allocations to gold ETFs by European and American financial institutions.
It is more likely that capital inflows into the futures market or other forces buying physical gold in large quantities have driven prices higher. Central banks' increased gold reserves may have further absorbed physical gold that could otherwise have been used for investment. Gold's safe-haven function is more evident in extreme situations, such as international tensions, where physical gold can serve as a means of payment.
Overall, gold prices are more closely tied to fluctuations in the U.S. dollar. The increased uncertainty affecting gold prices this year has also kept investors focused on future price trends.
Key factors influencing future gold prices include the timing of the Federal Reserve's interest rate cuts, the U.S. election, and U.S. economic data.
The Federal Reserve's decisions during its meetings have a direct impact on gold prices. If the market expects rate cuts, gold prices may continue to rise. However, based on current expectations, the Fed may delay rate cuts until after September. Nevertheless, due to lingering concerns about global economic uncertainty, gold prices are expected to remain volatile at high levels.
Additionally, the U.S. election could influence economic policies and market sentiment, thereby affecting gold prices. Whether Trump returns or Biden is re-elected, the economic policies of either party will impact gold price fluctuations.
Overall, 2024 presents many uncertainties, and gold prices are expected to remain volatile at high levels. For Zhaojin Mining, this represents a rare growth opportunity.
Recently, the company successfully completed a share placement. For the Hong Kong stock market, share placements are typically seen as negative news, leading to a noticeable correction in the company's stock price. If the price declines further, it may present a buying opportunity.
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