The stock price outperforms gold price, how does Zijin Mining (ZIJMF) perform?
After more than a decade, the "Top 100 Hong Kong Stocks" has become a touchstone and bellwether of the Hong Kong capital market, with listed companies demonstrating both strength and growth. Among them, $ZIJIN MINING(02899.HK) has been selected for the "Top 100 Hong Kong Stocks" multiple times, ranking 21st in overall strength in the previous edition. Interestingly, this year, gold prices have surged to record highs, and copper prices also peaked in the first half. Despite this, Zijin Mining's A- and H-share prices have outperformed both gold and copper. How does this globally renowned mining group truly measure up?
Zijin Mining's Stock Price Outperforms Gold and Copper
As one of the top five global producers of mined copper and the fastest-growing major gold producer, $Zijin Mining(601899.SH) Zijin Mining (601899.SH) has had a stellar year, thanks to strong rallies in gold and copper prices.
This year, driven by the Fed's rate cuts and heightened geopolitical risks, gold prices have repeatedly hit record highs, recently surpassing $2,730 per ounce. At the current price of $2,730.40, gold has surged 32.52% year-to-date, with most of the gains (19.64%) occurring in the second half of the year, as shown below.
In the first half of the year, copper prices briefly exceeded $5 per pound, fueled by expectations of economic recovery due to rate cuts in Europe and the U.S. and the shift toward new energy. However, concerns over weaker-than-expected global economic recovery led to a pullback in the second half. Recently, China's stimulus measures have spurred a rebound, as shown below.
At the current copper price of $4.4023 per pound, copper has gained 13.53% year-to-date. Note that after peaking in May, copper's second-half gains have slowed significantly, with only a 0.47% increase since then.
Zijin Mining's stock price, however, has clearly outperformed both gold and copper.
At its current A-share price of RMB 18.22, Zijin Mining has surged 48.87% year-to-date; its H-share price of HKD 17.40 reflects a 39.30% gain.
Assessing Zijin Mining's Value Through Q3 Results
Zijin Mining recently released its Q3 2024 results. In the first three quarters, revenue rose 2.39% YoY to RMB 230.396 billion (in Chinese yuan, same below), though lower sales of gold concentrate, copper concentrate, and cathode copper partially offset higher sales and revenue from electrolytic copper and gold ingots.
However, rising gold and copper prices, along with slightly lower overall costs for key products like gold concentrate and mined copper, boosted gross margins. In the first three quarters, Zijin Mining's gross margin improved by 4.37 percentage points YoY to 19.53%, with gross profit up 31.94% YoY to RMB 45 billion. Non-GAAP net profit attributable to shareholders jumped 56.16% YoY to RMB 23.747 billion.
That said, Q3 performance slightly lagged Q2 due to lower average copper prices. Sequentially, Q3 revenue grew 5.74% to RMB 79.98 billion, but gross margin fell 1.43 percentage points to 20.24%, and non-GAAP net profit dropped 9.71% to RMB 8.314 billion. Still, non-GAAP net profit surged 49.75% YoY.
In May, Zijin Mining outlined its five-year production targets (see below), aiming for 1.11 million tons of mined copper and 73.5 tons of mined gold in 2024.
In the first three quarters, Zijin Mining produced 789,500 tons of mined copper (71.13% of its 2024 target) and 54 tons of mined gold (73.83% of its target).
Looking ahead to Q4, gold's recent rally and copper's rebound on China's stimulus measures suggest a sequential recovery in performance.
In lithium carbonate, the company delayed production at Argentina's 3Q project and the Laguocuo project to 2025, which may ease Q4 cost pressures and further solidify this year's earnings—a key reason for its stock outperformance.
Whether judged by fundamentals, growth prospects, or stock performance, Zijin Mining leads the pack. It's no surprise the company has been a "Top 100 Hong Kong Stocks" mainstay. Can it deliver another standout year? Stay tuned.
The "Top 100 Hong Kong Stocks" ranking, launched in 2012 by Tencent and Financial Times, uses big data and scientific metrics to evaluate Hong Kong-listed companies. It aims to identify high-quality, investable firms, setting benchmarks for investors and fostering a healthier market.
Author: Mao Ting
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