Zhaojin Mining 1818

[winston]

Not vested. From Phillips:-

Risks

Global economy recovers without obvious inflation and gold ends its risk- hedging mission temporally and goes down;

The US dollar bounce back strongly;

The Company can`t increase the gold reserve as expected.


Valuation

We think the gold will catch most investors` eyes, and the price will go up. After our estimation, we forecast the net profit for Zhaojin Mining will respectively get at CNY 698 and 835 million in 2009 and 2010, with EPS at CNY 0.48 and 0.57.

Because of good profitability and growth for gold companies, we take P/E as the valuation method. Tracking international and HK's gold shares, the average historical P/E is normally 2 times that of the indexes.

As far from 2004, the average P/E for HSI is 14.27X. We believe it is reasonable to give Zhaojin Mining 28x P/E of FY10, which is also its average historical P/E since listed. Then we give it 12m TP of HK$18.86, rating Buy.

[winston]

Not vested. From Dr. Check, The Standard HK:-

Gold stocks set to shine again

The Hang Seng Index has fallen around 7 percent since it peaked on November 18 at 23,100 points.

But many overseas markets gained ground over the same period. Dr Check therefore thinks that investors' risk appetite is still high and stock investments remain their preference.

The recent fall in the local benchmark is just a healthy correction due to China's possible curb on property speculation.

During the same period, the price of gold fell from US$1,200 (HK$9,360) per ounce to US$1,075. Possibly, it's time for the precious metal to go up again.

Many brokers are bullish on gold, setting a target of US$1,200 to US$1,400 for the next two years. So gold-mine shares may be worth watching.

Zhaojin Mining (1818) is the mainland's No2 gold miner in terms of reserves. It is estimated that its net profit may rise 20 percent for every 10 percent increase in the price of gold.

Last year, Zhaojin's reserves that can be mined amounted to 165.29 tonnes. Total output reached 17,619 kilograms. Revenue rose 42 percent to 2.15 billion yuan (HK$2.44 billion). Net profit gained 43 percent to 538 million yuan.

On September 17, I recommended Zhaojin at HK$14.78. It climbed to HK$17.28 in early December before falling back to HK$15 on Wednesday.

It closed at HK$15.60 on Thursday, an indication that its upward trend may have resumed.

http://www.thestandard.com.hk/news_deta ... 91228&fc=1

[winston]

Big picture for investors painted with gold

The Hang Seng Index closed higher yesterday but with turnover only HK$39 billion. Dr Check remains cautious.

US data showed that in December Japan overtook China as the biggest holder of US Treasuries with US$768.8 billion (HK$5.99 trillion) worth of bonds. China cut its Treasury holdings by US$34.2 billion to US$755.4 billion.

Just last May, Beijing had US$801.5 billion in Treasury notes. With China lending less to the United States, will it buy more gold?

The price of spot gold fell from a record US$1,200 per ounce to US$1,050 before rebounding to US$1,120.

Many brokers are still bullish, setting a target from US$1,200 to US$1,400 per ounce in the next one to two years. So stocks of gold miners are always a solid bet. Zhaojin Mining (1818) is the mainland's No2 gold miner in terms of reserves.

Net profits are expected to rise 20 percent with every 10 percent jump in the price of gold.

Last year, Zhaojin had minable reserves of 165.29 tonnes. Total output hit 17,619 kilograms.

Revenue rose 42 percent to 2.15 billion yuan (HK$2.44 billion) and net profits soared 43.1 percent to 538 million yuan.

Zhaojin closed at HK$15.66 yesterday. Wait for the stock to drop near HK$15.

http://www.thestandard.com.hk/news_deta ... 00218&fc=7

[winston]

FINANCIAL HIGHLIGHTS

The Group’s revenue amounted to approximately RMB2,796,991,000 in 2009, representing an increase of approximately RMB644,260,000, or approximately 29.93% as compared to 2008.

The net profit of the Group amounted to approximately RMB751,333,000 in 2009, representing an increase of approximately 39.62% as compared to 2008.

The basic earnings per share attributable to ordinary equity holders of the Company amounted to approximately RMB0.52 in 2009.

The Board proposed the payment of a cash dividend of RMB0.22 (before taxation) per share to all shareholders.

http://www.hkexnews.hk/listedco/listcon ... 328109.pdf

[winston]

Zhaojin charts golden future

Zhaojin Mining (1818), a mainland gold explorer, said the price of the precious metal may record double-digit growth this year.

"Investors might choose gold for diversification of risk as the global economic recovery is still relatively slow," chairman Lu Dongshang said.

Lu said every 1 percent hike in the gold price raises the firm's earnings per share by 2.04 percent.

Zhaojin allotted 500 million yuan (HK$568.72 million) for gold mine acquisitions this year, Lu said. "We are targeting to acquire gold mines located in Xinjiang, Gansu and Shandong. The 500 million yuan should be enough for one to two projects."

Chief financial officer Zhang Banglong said gross margin would steadily increase during the year if inflation was moderate.

High gold prices fueled a 1.66 percent gain last year in the firm's gross profit rate to 51.82 percent.

The World Gold Council, meanwhile, yesterday said China's gold demand is expected to double over the next decade from 423 tonnes in 2009.

Source: SOPHIE HE, The Standard HK

http://www.thestandard.com.hk/news_deta ... 00330&fc=2

[investar]

Zhaojin's profit increased 39.6% yoy, beat estimates.
Guotai Junan maintains BUY and target 17.4$.
2010E P/E is 18.7

I think every portfolio should hold at least one gold-related stock.
On the HK market, I prefer Real Gold Mining 0246, even after the recent run: higher growth & lower P/E
In the US/Canada, I like Exeter Resources XRA: recently good exploration results, and quite heavy speculation on takeover by Barrick or Kinross

[winston]

Dont understand why gold companies should trade at 2x the PE of the indices. GIGO ...

Not vested. From Phillips:-

Risks
Global economy recovers without obvious inflation and gold price goes down;
The Company can`t increase the gold reserve as expected.


Continue buying gold stock

We think the gold will catch most investors` eyes in medium to long term, and the price will go up. After our estimation, we forecast the revenues for Zhaojin Mining will respectively reach up to RMB3.9 and 4.7 Billion in 2010 and 2011, and the net profit will be RMB1.019 and 1.313 billion, with EPS at RMB 0.70 and 0.90.

Because of good profitability and growth for gold companies, we take P/E as the valuation method. Tracking international and HK's gold shares, the average historical P/E is normally 2 times that of the indexes.

Since the 1990s, average P/E of HSI is 14.56X. We conservatively give Zhaojin Mining 27x P/E of FY10, which is also its average historical P/E since listed. Then we give it 12m TP of HK$21.58, rating Buy.

[winston]

Not vested

DJ MARKET TALK: Zhaojin Down Pre-Mkt; Strong Growth Ahead -CPY

0951 [Dow Jones] Zhaojin (1818.HK) down 0.2% at HK$18.80 at pre-market, expected to fall more on post-results profit-taking (stock +12.1% month-to-Friday) after 1H results come in roughly in line, with net profit +75.5% on year at CNY561.19 million, as sharp rise in results likely expected after company issued profit guidance earlier this month.

"We expect that Zhaojin will continue to demonstrate strong growth in earnings, which will mainly driven by expansion through M&A as well as further development of its existing mines," says Core Pacific-Yamaichi.

Adds a higher gold price would also give boost to the company's profitability. House currently reviewing its earnings forecasts and rating of stock.


Source: Dow Jones Newswire

[winston]

Not vested

DJ MARKET TALK: Zhaojin Down 1.5%; Buy Into Weakness-GuocoCapital

1214 [Dow Jones] Zhaojin Mining (1818.HK) down 1.5% at HK$18.56 on profit-taking after stock +12.1% month-to-Friday. Company reports 1H net profit +75.5% on-year at CNY561.19 million, but strong results well flagged as company had already issued profit guidance earlier this month.

GuocoCapital says results in line with expectations. "The significant boost of earnings was mainly due to an increase in both gold output and gold price as compared to same time last year."

Keeps at Buy with HK$20.90 target; thinks gold price will further go up in September, which is traditional peak season for physical gold; adds, every correction of gold price this month is good entry opportunity for Zhaojin.

Source: Dow Jones Newswire

[winston]

Not vested. From Phillips :-

Risks

Global economy recovers without obvious inflation and gold price goes down;
The Company can`t increase the gold reserve as expected.


Continue buying gold stock

We think the gold will catch most investors` eyes in medium to long term, and the price will go up. After our estimation, we forecast the revenues for Zhaojin Mining will respectively reach up to RMB4.1 and 4.9 billion in 2010 and 2011, and the net profit will be RMB1.344 and 1.734 billion, increasing 78% and 29% respectively, with EPS at RMB 0.92 and 1.19.

Because of good profitability and growth for gold companies, we take P/E as the valuation method. Tracking international and HK's gold shares, the average historical P/E is normally 2 times that of the indexes.

Since the 1990s, average P/E of HSI is around 14X. Based on the high growth and surging gold price, we think Zhaojin Mining should enjoy the premium, giving the Company 35x P/E of FY10.



Then we give it 12m TP of HK$21.58, rating Buy.