Zhaojin Mining 1818

[winston]

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Gold has been volatile. The bulls are buying and the charts suggest the uptrend will continue in the long term. Hold onto your long positions.

Locally, Zhaojin Mining (1818) shares have fallen more than 30 percent from their peak to near a 52-week low. Below HK$12, the stock is quite attractive.


Source: Dr. Check, The Standard HK

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NOTICE OF 2011 ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting (the “Annual General Meeting”) of Zhaojin Mining Industry Company Limited (the “Company”) for the year 2011 will be held at the Company’s conference room at No. 299 Jinhui Road, Zhaoyuan City, Shandong Province, the People’s Republic of China (the “PRC”) at 9:00 a.m. on Tuesday, 29 May 2012 for the following purposes:

http://www.hkexnews.hk/listedco/listcon ... 413526.pdf

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ZHAOJIN MINING (01818) rated Outperform, TP HKD23.59 by Stanchart on compelling valuation
2012-03-26 15:17:33

Standard Charter reported on ZHAOJIN MINING (01818) stating its Outperform rating and target HKD23.59 with the following details:

Zhaojin Mining (1818 HK) reported FY2011 net profit of RMB1,662mn, up 38% YoY. This is 8% higher than our estimate of RMB1,533mn and 8% lower than the consensus number of RMB1,800mn.

We believe the key drivers of profit growth are a higher gold price and higher gold mine production volume in 2011.

Zhaojin had mine gold production of 380koz in 2011, up from 340koz in 2010. The production gain came from the Baiyun mine (up c.8koz), Zaozigou mine (up c.16koz), Xiadian (up c.12.5koz) and Daqin (up c.7koz).

The company's realised ASP for the whole year was RMB332.75/g (up 20% YoY), higher than the average gold price of RMB327.55/g on the Shanghai Gold Exchange during the same period.

Unit gold production cost increased from RMB113/t to RMB124/t, mainly due to the increase in contracting fees, labour cost and depreciation of newly built projects. Production cost in 2011 was RMB105/g at headquarter mines and RMB175/g for mines outside the headquarters.

By the end of 2011, the company had net debt of RMB1,914m and net gearing of 25%. The board suggested a final cash dividend of RMB0.21/sh, a 37% payout ratio which implies a dividend yield of 1.6%.

We expect Zhaojin to have production growth of 60koz from its own mine production in 2012 from 2011, mainly from mines beyond the headquarters; among these, Qinghe can increase volume by 19koz and Zaozigou can increase volume by 20koz.

Overall, we estimate that mine gold production could increase by 16% in 2012, 12% in 2013 and
10% in 2014 and 2015.

We forecast gold price at US$1,863/oz for 2012 and US$2,000/oz for 2013, and in the long term at US$1,248/oz. The higher gold price will continue to drive Zhaojin's earnings in 2012E.

We think the cost will continue to rise in 2012 and 2013 by 5% in each year. As production growth mainly comes from mines beyond headquarter, the implied blended unit cost rise by 9% in 2012E.

The company increased resource of 3,408koz and by the end of 2011, it had reserve of 9,551koz (up 17.9% YoY) and resource of 17,940koz (up 12.5% YoY). As part of the 3,408koz resource increase, 3,151koz came from exploration and 225koz from acquisition.

The average exploration cost in 2011 was US$10/oz, significantly lower than the industry average of US$70–80/oz.

The company targets to increase resource by 4,180koz (130 tonnes) in 2012, adding 50 tonnes via acquisition and 80 tonnes via exploration. It acquired only 7 tonnes of gold resources in 2011, which was below our expectation but we believe this was because some projects were still under negotiations and could materialise this year.

Zhaojin also announced its plans to acquire two gold projects (Houcang in Shandong province and Jinhanzun in Xinjiang) from Zhaojin Non-ferrous (see the table below for details).

The acquisition price for Houcang seems to be on the high end of the range of market prices, which management explained is because it is a high-grade mine with shallow depth and the ores are non-refractory. The payment for the acquisition will be purely equity, by way of the private placement of domestic shares that are non tradable. (t)

Source: AAStocks Financial News

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ZHAOJIN MINING (01818) proposes to return to A share mkt, with capital expenditure of RMB2.5B
2012-03-26

ZHAOJIN MINING (01818)'s chairman Lu Dongshang expressed that gold price has optimistic outlook this year as the European debt crisis, the inflation problem, the political instability in the Middle East and the increase of holding by central banks also boost the demand in the market.

The company proposes to return to the A share market; yet, it has not yet decided the fund raising amount.

CFO Zhang Banglong said the capital expenditure this year was RMB2.49 bln, of which RMB800 mln will be used for acquisition and RMB 900 will be used to improve the construction and technology.

The company believes it has sufficient funds for development as it still has unused bank credit line of RMB5 bln at present. (t)


Source: AAStocks Financial News

[winston]

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ZHAOJIN MINING (01818) TP cut to HKD15.24 by CS as margin under pressure
2012-03-26

Credit Suisse reported on ZHAOJIN MINING (01818) stating its Neutral rating and target HKD15.24 with the following details:

Zhaojin’s FY11 net profit was Rmb1.66 bn, or EPS of Rmb0.57, up 38% YoY, but 7% and 6% less than consensus and our estimate, respectively.

Gold ASP was up 20% YoY, but gross margin declined slightly by 3 pp YoY to 53% due to rising costs. Cost pressure has been significant, as the HY number suggested that with gold price up 37% in 2H11 over 1H10, Zhaojin’s gross margin was down 7%.

With future growth coming from high-cost areas outside of Zhaoyuan, we expect the cost pressure to continue.

Inventory was up significantly to Rmb2.1 bn, along with account payable rising by Rmb1.1 bn. This could slightly contribute to additional profit in 1H12. Net gearing remained at 50% level, reflecting the continuous expansion ambition.

We have slightly revised down our 2012E and 2013E earnings by 1% and 2%, respectively, to reflect the increasing cost pressure.

We maintain NEUTRAL with a revised TP of HK$15.24 (from HK$15.7), based on implied gold price of US$1,200/oz.

Source: AAStocks Financial News

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ZHAOJIN MINING (01818) earns 38% more last yr with final div 21 fen
2012-03-26

ZHAOJIN MINING (01818) announces its 2011 results.

The income jumped 40% YoY to RMB5.471 bln. The net profit rose 38% to RMB1.662 bln with earnings per share 57 fen. The final dividend was 21 fen against a final dividend of 30 fen declared in same period of last year.

The full-year net profit climbed 32.6% to RMB3.064 bln.

The gross profit margin declined to 53.37% from 56.39%.

As of end of 2011, gold production equaled 23,577 kg, up 12.7%.

Source; AAStocks Financial News

[winston]

not vested

Valuation/Recommendation

• We think Zhaojin’s underperformance to gold prices is overdone. Chinese gold prices rose 4% ytd from end-11, while Zhaojin’s share prices
declined by 7%.

• We think its share prices underperformance to gold is a reflection of market’s disbelief of solid volume growth of 15% yoy in 2012 and concern
on cost pressure, which is unjustified.

• Zhaojin has a strong balance sheet and many existing projects to be upgraded, let alone external growth from acquisitions. We are comfortable
with its guided 15% yoy increase in self-produced gold production growth, which is the lowest growth since 2007.

• Even though we have assumed more cost pressure (ie 15% increase instead of 10% yoy increase as guided by management) which resulted in
a below-consensus 2012 forecast, Zhaojin’s valuation still looks attractive, trading at 12x 2013 PE, below its 5-year historical average PE of 15x.

• We reiterate BUY with target prices lowered to HK$14.70, based on 15x 2013 PE.


Share Price Catalyst

• Gold price increase. Zhaojin is sensitive to gold price increase. For every 1% increase in gold, Zhaojin’s gold price increases by 2%.
• Faster-than-expected gold production volume growth.
• Parent asset injection.

Source: UOBKH

[winston]

ZHAOJIN MINING (01818) maintained Neutral, TP reduced to $14.7 by CS
2012-04-26

Credit Suisse reported on ZHAOJIN MINING (01818) stating its Neutral rating and target $14.7 with the following details:

Zhaojin 1Q12 net profit was Rmb216 mn, or EPS of Rmb0.07/share, down 5% YoY, due to lower sales volume and rising costs.

Zhaojin’s 1Q12 turnover was up by 10% vs gold price up by 22% YoY. Inventory is still rising but appears in different forms.

We break down Zhaojin’s real earnings driver—own mined gold— from purchased and processing volumes and see its 2011 growth down to 9.8% YoY, from 15.4% in 2010.

We expect this growth rate to be 9.0% in 2012, or total mined gold output of 411.3koz, mainly contributed by mined production outside Zhaoyuan.

Constrained by its slowing volume growth and higher unit cost in mines outside Zhaoyuan, we expect the company’s earnings growth to be adversely affected. Revised down 2012E and 2013E EPS by 15% and 22% to Rmb0.64 and Rmb0.70, respectively.

We maintain the view that Zhaojin’s earnings growth should become modest from 2012 onwards.

Maintain NEUTRAL and lower its TP to HK$14.7/share (from HK$15.2/share), based on implied gold price of US$1,200/Oz.


Source: AAStocks Financial News

[winston]

vested

Zhaojin Mining Industry (1818) - a Shandong-based gold miner and smelter operator - also posted a profit warning yesterday.

Zhaojin said its first-half net profit will decrease this year due to poor sales and rising inventory.

It expects to earn a net profit of about 225 million yuan (HK$274. 4 million) in the first six months of the year, down 7.8 percent from a year ago.


Source: The Standard HK

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MARKET TALK: Zhaojin Falls 7.6%, 1H Profit Warning; DB Keeps Buy

1520 [Dow Jones] Zhaojin Mining (1818.HK) drops 7.6% to HK$9.39 after warning its 1H12 results are expected to decrease on-year, although it doesn't specify the likely magnitude of earnings decline.

Zhaojin cites a decrease in the sales of gold bullion and the significant increase in inventory for its earnings woes.

Deutsche Bank says it had already indicated that Zhaojin is likely to "miss consensus by a wide margin" as the company is likely to withhold sales of its gold bullion productions in anticipation of higher gold prices in 2H, but even so it still forecasts earnings growth of 6% given higher 1H gold prices on-year (14%).

"With the profit warning issued, one can only assume that sales volume in 2Q is significantly lower than what we are expecting."

Given the lack of disclosure by the company on the extent of profit declines, DB says it's hard to gauge sales volume during 2Q.

The house for now has a Buy call on Zhaojin with a target price of HK$14.30.

Source: Dow Jones Newswire