Zijin Mining 2899

[winston]

DJ MARKET TALK: UOB Ups Zijin Mining Target To HK$5.60 Vs HK$3.43

1027 [Dow Jones] STOCK CALL: UOB-KayHian raises Zijin Mining (2899 HK) target price to HK$5.60 from HK$3.43 despite projected 2009 earnings decline on lower copper, zinc prices. New target based on 20% premium to life-of-mine fair value of gold, copper, iron ore reserves of HK$4.66. Keeps at Buy.

"Being China's biggest gold producer (13% of market share in 1H08), it will benefit from the robust prices of gold, one of the a few commodities whose average price rose in 2008." Notes 2008 average gold price +25% at about US$872/oz. "With the humongous sums going into pump-priming around the world, inflation will come back to haunt us.

Gold, which has been resilient, will be that economic refuge for investors wary of a return to inflation and rising government indebtedness." Shares up 4.8% at HK$4.34; HSI up 1.7%.

[winston]

DJ MARKET TALK: Zijin Mining Has Clear Earnings Visibility - CPY

0956 [Dow Jones] STOCK CALL: Core Pacific-Yamaichi tips Zijin Mining (2899.HK) to deliver 21% earnings growth for 2008 on firm gold price, assuming weak USD as increasing amount of money being pumped into U.S. financial system.

Says gold segment to account for 67% of total revenue, 57% of gross profit. Keeps at Buy, targets HK$4.85.

"Zijin is one of the few companies that has clear earnings visibility amid the economic recession." Tips gold price to reach $850/oz, $900/oz for 2009 and 2010 respectively. Stock last +1.0% at HK$4.15 at pre-open.

[winston]

20090116 Macquarie Zijin Mining
Excellent but expensive

Event
We have an Underperform rating on Zijing Mining with a price target of HK$3.00 based on DCF and adjusted for Macquarie’s recent commodity price forecast changes. Coverage has been transferred to Xiao Li.

Impact

Commitment to copper smelting: Zijin has announced it will invest over Rmb1.3bn in a 200 ktpa copper smelter. This is more of a political project benefiting the local government and community rather than shareholders due to its low-margin nature.


Further downside to copper and zinc prices: If China’s economy fails to revive, copper prices could test new lows in the coming 12 months. Using Macquarie’s 2009 zinc price forecasts, Zijin’s entire zinc business could register a loss.


Further investments in Peru copper mine: Zijin has not decided a timetable for its Peru copper project. However, the Peruvian government requires it to purchase the whole area around the deposit to set up a buffer for environmental protection. If this is the case, a significantly higher investment will be required. With the current weak copper prices, it will be increasingly difficult to justify the project.


Gold expected to rise: With the US trade deficit still high, we do not see a great possibility of a gold price collapse in the near term. Before the US economy bottoms, gold should be the best counter-cyclical play and investors should add gold on weakness. This is the risk to our Underperform call.

Earnings revision


We reduce our 2009 and 2010 EPS forecasts by 47% and 28%, respectively, due to lower ASP and production forecasts.

Price catalyst


12-month price target: HK$3.00 based on a DCF methodology.


Catalyst: 2008 annual result announcement on 23 March. We suspect the company’s gold production will disappoint.

Action and recommendation


We rate the stock Underperform due to its expensive valuation, risky involvement in copper mining and smelting projects, slowing gold expansion, and losses from its zinc business in 2009.

[winston]

DJ MARKET TALK: Zijin May Fall Despite Tipping FY08 Net Pft Rise

0850 [Dow Jones] Zijin (2899.HK) may fall despite company tipping 2008 net profit to rise more than 17% due to higher gold, copper prices in 9M08, increased output. While guidance tips FY08 net profit at no less than CNY3 billion vs 2007's CNY2.55 billion, based on Chinese accounting standards, also indicates 4Q08 earnings growth slowed vs 9M08 net profit +42.2% at CNY2.58 billion; also actual FY08 net profit may be below Thomson Reuters forecast of CNY3.26 billion.

But, any downside likely limited due to sector's safer-haven status amid equity-market volatility. Also, some analysts believe gold price could test $950/oz near-term, likely to provide support to sector. Zijin scheduled to issue 2008 results March 23. Stock closed +1.7% at HK$4.21 Wednesday, first line of defense at 10-day moving average of HK$4.09.

[winston]

DJ MARKET TALK: Zijin +4.0%;But Wait For Better Entry Point-Guoco

1452 [Dow Jones] Zijin (2899.HK) +4.0% at HK$4.39 vs HSI up 0.7%, after company guides for of over 17% on-year rise in 2008 net profit to more than CNY3 billion.

Guoco Capital says guidance slightly higher than its forecast of CNY2.97 billion. But adds, this implies 4Q earnings to drop by about 50% on-quarter to about CNY432 million due to sharp falls in gold, copper and zinc prices amid breakout of financial crisis.

Rates at Hold, 3-month target at HK$4.54, or 16X 2009 P/E. "Long-term investors should wait for a better entry point," it says. Early high of HK$4.51 as immediate cap.

[winston]

Zijin Mining Group (2899.HK) outperformed with a 3.5 percent gain after the tax on its earnings was cut to 15 percent from 25 percent for three years, including 2008, after the company was recognised as a new and high-technology enterprise.

[winston]

DJ MARKET TALK: Guoco Ups Zijin To Buy Vs Hold; Ups Target 10.2%

1508 [Dow Jones] STOCK CALL: Guoco Capital upgrades Zijin (2899.HK) to Buy vs Hold, also raises target to HK$5.40 from HK$4.90, following recent strength in gold price.

"Fund managers and investors are rushing to gold as a safe haven as evidenced by the increased gold holding by the biggest gold ETF," says Guoco. Tips gold price to be range-trading in $880-$950 band near-term as physical demand, especially from jewelry consumption, will decline amid global economy's slowdown. Raises 2009 earnings forecast to CNY4.131 billion from CNY3.621 billion. Stock +3.9% at HK$4.80

[winston]

DJ MARKET TALK: BNP Raises Zijin Target To HK$5.30; Keeps Buy

0843 [Dow Jones] STOCK CALL: BNP Paribas hikes Zijin Mining (2899.HK) target price to HK$5.30 from HK$2.37, keeps Buy call. Raises FY09, FY10 earnings forecasts by 15.9%, 40.2% respectively to reflect higher gold price forecast; new target based on DCF for gold assets, 10X FY09 P/E for copper assets.

Says gold price has decoupled with USD, oil price, now "playing the role of a safe haven in a turbulent global economy"; believes gold price will stay firm until significant easing of global economic crisis. Adds, with strong balance sheet, Zijin well positioned to make acquisitions. Stock +4.5% at HK$4.91 yesterday

[winston]

DJ MARKET TALK:Zijin Off 7.2% On Pft-Taking;BOCI Ups Target 15.3%

1210 [Dow Jones] Zijin Mining (2899.HK) down 7.2% at HK$5.70, succumbing to profit-taking after 38.0% gains over past 10 sessions, with strong interest in gold rekindled due to U.S. Fed's quantitative easing measures. BOCI keeps Zijin as Buy, raises target price to HK$6.80 from HK$5.90 on higher valuations metrics, stays bullish on gold price outlook; notes company's production, exploration goals on target, operating expenses stable.

Volume modest at HK$258.3 million, suggesting profit-taking pressure not terribly heavy; on trading screen, bids outnumber asks, suggesting some investors trying to buy on pullback. Peers also suffer profit-taking; Zhaojin Mining (1818.HK) down 8.5% at HK$10.52, Real Gold (0246.HK) down 4.5% at HK$5.76; SPDR Gold ETF's (2840.HK) beta much lower, down 1.6% at HK$718

[winston]

DJ Zijin Mining 1Q Net Profit Up 20.6% To CNY912.4 Mln

SHANGHAI (Dow Jones)--Gold miner Zijin Mining Group Co. (2899.HK) said Monday the company's first-quarter net profit rose 20.6% due to its rising gold output. The Hong Kong and Shanghai-listed company said net profit for the three months ended March 31 was CNY912.4 million, up from CNY756.8 million a year earlier, according to Chinese accounting standards.

Revenue for the first quarter rose 38% to CNY4.95 billion from CNY3.58 billion. Demand for gold in China has been growing rapidly as its booming economy increases consumer spending power. China is the world's largest gold producer and the second-largest global consumer