Zhaojin Mining 1818

[Atlas]

MARKET TALK: CLSA Cuts Zhaojin Mining To Underperform From Buy (Dow Jones News)

Date: 2011/05/03 07:05

0700 [Dow Jones] STOCK CALL: CLSA downgrades Zhaojin Mining (1818.HK) to Underperform from Buy, noting that since August, its top China gold sector pick's share price has risen 122%, while the gold price has only risen 29%.

"Despite our bullish view on gold price, the quality gold equities had a sharp rally ahead of time. Near-term valuations look stretched and we recommend investors to realize gains."

The house cuts its target price to HK$38.00 from HK$41.00 after lowering 2011-12 earnings forecasts by 13%-26% on a forecast 31%-49% rise in unit costs after 2010's 22% on-year cost increase and guidance for another 10% rise in 2011.

The stock ended down 3.6% at HK$35.95 Friday; markets were closed Monday.

[winston]

Not vested

Up 5% on no news.

Should have invested in this counter rather than Real Gold, eventhough the PE on this counter is 35 compared to Real Gold's PE of 9.

It's always about Quality

[Muhajir]

Not vested

Up 5% on no news.

Should have invested in this counter rather than Real Gold, eventhough the PE on this counter is 35 compared to Real Gold's PE of 9.

It's always about Quality

Hi Winston,

Hindsight is a bummer. She always makes you feel inadequate.

There will be a better opportunity who knows.

Ali

[winston]

Gold price boosts Zhaojin profit by Grace Cao
Tuesday, August 16, 2011

Zhaojin Mining Industry (1818) posted a 28.3 percent gain in first- half profit to 720 million yuan (HK$878 million), thanks to rising output and soaring gold prices.

"We believe gold price is likely to break US$2,000 (HK$15,600) per ounce by the end of this year," said chairman Lu Dongshang, adding the firm's selling prices will continue to rise throughout the year.

Spot gold hit US$1,814.95 per ounce, a record, on August 11.

Zhaojin sold its gold at an average price of 8,908 yuan per ounce - 229 yuan higher than the average price quoted in the Shanghai Gold Exchange during the first six months.

The Shandong-based firm produced 367,560 ounces of gold in the first half - up 11.76 percent from a year back, with 245,443 ounces coming from self-owned mines.

"We will catch up in the second half to accomplish the whole year target of 676,200 ounces,"said Lu.

Zhaojin plans to spend more than 500 million yuan to acquire gold mines in Xinjiang, Inner Mongolia, and Shandong this year.

An additional 1.3 billion yuan will be used in infrastructure reform in newly acquired projects.

First-half revenues hit 2.5 billion yuan, a 49 percent jump over the previous year. Earnings per share rose 31.6 percent to 25 fen. No interim dividend was declared.


http://www.thestandard.com.hk/news_deta ... 10816&fc=2

[winston]

Not vested. PE 34; EPS growth 30%

DJ MARKET TALK: Zhaojin Mining +2.0%; Solid 1st-Half Results - Macquarie
Aug 16, 2011

1458 [Dow Jones] Zhaojin Mining Industry (1818.HK) is up 2.0% at HK$16.98, after the gold producer reported Sunday a 32% rise in EPS for 1H.

Macquarie keeps a Buy rating on the stock, with a HK$18.00 target, after attending a post-results meeting with management. It says management is confident in reaching its full-year new exploration and output target, with gold resources increasing 95 metric tonnes and gold output totaling 676,000 oz.

It notes the stock was down after results because of profit-taking due to its recent strong run as well as a misunderstanding of the numbers on the surface.

"We suggest taking an opportunity buying into recent weakness, as we believe the company will deliver on a full-year basis."

Source: Dow Jones Newswire

[winston]

not vested

DJ MARKET TALK: HK Gold Miners Up; L/T Bull Trend For Gold Intact

1401 [Dow Jones] HK gold miner stocks are higher, outperforming the HSI's 1.1% fall, supported by expectations that the gold prices will be on a rising trend in 4Q, says Prudential Brokerage associate director Alvin Cheung;

"the recent weakness in gold prices was mainly due to some volatility as a result of the U.S. dollar level and the markets hiccups in equities. But I believe the long-term bull trend in the yellow metal remains intact."

His pick in the sector is Zhaojin (1818.HK), as the stock is viewed as a proxy for gold investment given its over 90% revenue contributed by gold operations. The stock has quickly recovered from its year-to-date low of HK$9.94 (set on Sept. 26). It's up 4.7% at HK$13.34, though the current level still marks a 26.7% fall month-to-date.

Source: Dow Jones Newswire

[winston]

not vested

Valuation/Recommendation


Reiterate BUY but we lower our target price to HK$17.00 on the back of our reduced earnings numbers for 2012.

Our target price is based on Zhaojin’s average historical PE mean of 18x.

It is currently trading at 15x 2012F PE and our target price implies a 24% price upside.


Share Price Catalyst

Higher-than-expected gold prices in 2012 and 2013.

Higher-than-expected self-produced gold production.

Source: UOBKH

http://research.uobkayhian.com/content_ ... b12aeb6249

[winston]

not vested

Earnings Revision/Risk

We revise down our earnings forecasts for 2012 and 2013 by 8% and 7% respectively, based on our concern that the cost of production may exceed management’s target of 10%.

New gold output growth will come from high-cost gold mines outside Zhaoyuan, its original production base. Zhaojin targets that the production split between Zhaoyuan and non-Zhaoyuan gold mines will be 50:50 in 2015, from 75% and 25% in 2011.

In Zhaoyuan, its comprehensive cost was Rmb105/tonne in 2011.

Outside Zhaoyuan, product cost was Rmb175/tonne, 67% higher (due mainly to higher depreciation and amortisation costs and lack of economies of scales).


Valuation/Recommendation

We reiterate BUY with our target price lowered to HK$15.40, which is based on 15x 2013F PE, its 5-year historical average PE mean.


Share Price Catalyst

Gold price increase. Zhaojin is sensitive to gold price increase. For every 1% rise in gold, Zhaojin’s gold price goes up by 1.5%.

Faster-than-expected gold production volume growth.

Parent asset injection.


Source: UOBKH

[winston]

not vested


Risks

Gold price performance is worse than expected;
The company did not expand its gold reserves as scheduled;
Impact of emergency incidents such as environmental pollution.


Buying continuously to be recommended

We predict gold assets will draw market eye in mid-and-long term, and future value rise potential is large. Through comprehensive estimates, we predict Zhaojin Mining turnover in 2012 and 2013 will reach RMB7.624 billion and RMB9.393 billion respectively, while net profit will reach RMB2.310 billion and RMB2.766 billion respectively, converted to RMB0.79 and RMB0.95 EPS, increasing by 39% and 20% respectively.

For evaluation, gold stocks have good profitability and growth and we estimate with PE method. Taking into consideration the international gold stocks, the current average PE ratio is 16 times.

Since Zhaojin Mining profitability is in the leading level of the industry, the company enjoying good growth, we grant 18X PE for 2012 EPS estimate, the 12-month target price to be HKD17.55, a 38% premium over the current price. Therefore buy rating is maintained.


Source: Phillips

[winston]

not vested

DJ MARKET TALK: DB Starts Zhaojin Mining At Hold; HK$15.00 Target
Mar 9, 2012

0854 [Dow Jones] STOCK CALL: Deutsche Bank starts Zhaojin Mining (1818.HK) at Hold with a target price of HK$15.00.

It says Zhaojin has been trading at a premium vs its peers since early 2011, which it believes is largely justified as the company provides over 90% exposure to the gold price, and offers strong production growth and a competitive cost structure.

"However, we think the above positives are now fully priced in, and that there is potential risk of upward cost pressure ahead, as Zhaojin's future production growth comes mainly from greenfield developments of smaller projects."


Source: Dow Jones Newswire