中金：首予潼关黄金 “跑赢行业” 评级 目标价 3.52 港元
CICC initiates coverage on TONGGUAN GOLD with an "Outperform Industry" rating and a target price of HKD 3.52. It expects EPS for 2024-2026 to be HKD 0.16 and HKD 0.23, with a CAGR of 121%. The company emphasizes exploration and resource expansion, anticipating gold sales of 2.8 tons and 3.4 tons in 2025-2026. Zijin Mining's strategic investment demonstrates recognition of the company's asset quality. The decline in real interest rates and the trend of central bank gold purchases will support the rise in gold prices. Potential catalysts include the upward movement of gold prices and the smooth progress of exploration to production in mining areas
According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it expects TONGGUAN GOLD (00340) to have EPS of HKD 0.16 and HKD 0.23 for 2025 and 2026, respectively, with a CAGR of 121% from 2024 to 2026. This corresponds to current price-to-earnings ratios of 17.3 times and 11.6 times. The firm initiates coverage on TONGGUAN GOLD with an "outperform" rating and a target price of HKD 3.52, implying a 30% upside from the current stock price based on a 15.0 times P/E ratio for 2026. The firm believes the company has a gene that emphasizes exploration and resource expansion, and the potential for gold production growth is expected to exceed market expectations.
CICC's main points are as follows:
A gold company with strong internal growth momentum through exploration
In terms of resources, the company values the strategic significance of exploration and resource expansion, owning a total gold resource of 55.0 tons in the TONGGUAN and Subei mining areas, with an average grade of 8.26 grams per ton. In terms of production, the exploration-to-production transition in the TONGGUAN mining area is expected to drive production growth, with the firm forecasting gold sales of 2.8 tons and 3.4 tons for 2025 and 2026, respectively. Regarding costs, the company acquired Xi'an Hongshang, a mining engineering supplier, in January 2025, which is expected to lower production costs in gold mining through industry chain integration.
Strategic investment from Zijin Mining, with potential for external acquisition growth
In April 2025, Zijin Mining, through its wholly-owned subsidiary Zijin Metals, acquired 3.82% of the company's shares and will engage in metal streaming cooperation, prepaying USD 25 million in cash. The firm believes that Zijin's stake reflects recognition of the company's asset quality and strategic direction, and the metal streaming cooperation is beneficial for increasing the company's disposable cash. Based on the company's cash flow improvement and exploration capabilities, there is potential for external acquisition growth in the future.
Support for rising gold prices from declining real interest rates and central bank gold purchases
Firstly, against the backdrop of weakening U.S. employment data and overall controllable inflation, a new round of interest rate cuts is being initiated, and declining real interest rates are expected to drive gold prices up. Secondly, the People's Bank of China restarted gold purchases in November 2024, and the firm believes that the central bank is likely to replicate the successful operation of counter-cyclical gold accumulation, with the trend of central bank gold purchases expected to continue.
Potential catalysts: Continued rise in gold prices, smooth transition from exploration to production in the TONGGUAN mining area, and further integration of the industry chain to reduce costs.
Risk warnings: Fluctuations in gold prices; exploration-to-production transition not meeting expectations; gold mining costs exceeding expectations
