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Company Report: Zijin Mining (02899 HK) Kevin Guo 郭勇
公司报告:紫金矿业(02899HK)
+86 755 23976671
kevin.guo@gtjas.com
Benefit From Gold Price Rise, Upgrade to “Buy”
受益于金价上涨,上调至“买入”评级
� Zijin Mining is expected to benefit moderately from rising gold prices.
Gold mining business, which is the main beneficiary of gold prices rise, only
constitutes about 25% of the total revenue of the Company.
� Maintain the output assumption and production costs assumption
unchanged. We expect the Company to accomplish the previous output
target. Besides, we have taken into all the unfavorable factors that impact
production costs into account.
� Gold prices benefit from the recent launch of QE3 and is expected to
continue to rise and stay at high levels in 4Q2012 and next year. We
revise up our 2012 average gold prices assumption from RMB 325/g to RMB
350/g, up by 7.7%, which is equivalent to about 1,700 US$/oz.
� Revise up TP to HK$ 4.50 due to higher EPS estimation and PE
valuation, upgrade to “Buy”.
� 紫金矿业将适度受益于黄金价格的上涨。黄金开采业务是金价上涨的主要收益部门,但它
们的业务只占公司的 25%。
� 维持产量和生产成本假设不变。我们预计公司能够完成全年的生产计划。此外,我们已经
将影响生产成本的不利因素考虑在内。
� 黄金价格受益于美联储最近推出的 QE3,预计在 2012 年 4 季度将继续上涨并保持在
高位。我们将 2012 年黄金平均价格假设从 325 元/克上调至 350 元/克,上涨 7.7%,
相当于 1,700 美元/盎司。
� 基于更高的 EPS 预测和 PE 估值,上调公司目标价至 4.50 港元,上调至“买入”评
级。
20 September 2012
Rating: Buy
Upgraded
评级: 收集 (下调)
6-18m TP 目标价: HK$4.50
Revised from 原目标价: HK$2.79
Share price 股价: HK$3.160
Stock performance
股价表现
(40.0)
Sep-11 Dec-11 Mar-12 Jun-12 Sep-12
See the last page for disclaimer Page 1 of 6
30.0
20.0
10.0
0.0
(10.0)
(20.0)
(30.0)
% of return
Change in Share Price
股价变动
Abs. %
绝对变动 %
Rel. % to HS index
相对恒指变动 %
Avg. share price(HK$)
平均股价(港元)
HSI Index Zijin Mining
1 M
1 个月
Source: Bloomberg, Guotai Junan Internationa.l
3 M
3 个月
1 Y
1 年
25.1 11.3 (0.3)
21.9 5.0 (9.4)
2.7 2.6 2.9
Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE
年结
收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率
12/31
2010A
2011A
2012F
2013F
2014F
(RMB m)
28,540
39,764
43,696
46,321
52,819
(RMB m)
4,828
5,713
5,294
5,142
4,947
(RMB)
0.221
0.262
0.243
0.236
0.227
(△%)
35.9
18.3
-7.3
-2.9
-3.8
(x)
11.7
10.6
11.5
11.8
12.3
(RMB)
1.001
1.184
1.354
1.519
1.678
(x)
2.8
2.3
2.1
1.8
1.7
(RMB)
0.067
0.079
0.073
0.071
0.068
(%)
2.6
2.8
2.6
2.5
2.4
(%)
24.1
24.0
19.1
16.4
14.2
Shares in issue (m) 总股数 (m) 21,812.0 Major shareholder 大股东 Xinghang Investment 29.0%
Market cap. (HK$ m) 市值 (HK$ m) 97,394.3 Free float (%) 自由流通比率 (%) 27.4
3 month average vol. 3 个月平均成交股数 (‘000) 38,291.38 FY12 Net gearing (%) FY12 净负债/股东资金 (%) 17.5
52 Weeks high/low (HK$) 52 周高/低 3.920/1.950 FY12Est. NAV (HK$) FY12 每股估值(港元) 6.8
Source: The Company, Guotai Junan International.
GTJA Research 国泰君安研究
Zijin Mining 紫金矿业 (02899 HK)
Company Report

Zijin Mining is expected to benefit moderately from rising gold prices. Zijin Mining is an integrated mining company
which produces not only gold, but also copper, iron ore and other metals. Although total refined gold output of the Company is
expected to reach 80 tons in 2012, about 50 tons of the output is contributed by smelting business which purchase gold
concentrates from outside. Gold mining business, which is the main beneficiary of gold prices rise, only constitutes about
25% of the total revenue of the Company. As gold prices rise also raises the material costs of smelting business, the impact to
gold smelting business is neutral. We estimate that if gold prices rally by 10%, the 2012 net profit of the Company is only
expected to rise by about 10%.
Table 1 Gold prices sensitivity of the Company
Gold Price Assumptions (RMB/t) Net Profit (RMB million)
FY12 FY13 FY14 FY12 FY13 FY14
Base Case 350 325 325 5,294 5,142 4,947
Case1 385 358 358 5,816 5,682 5,493
Change v.s. Base Case 10% 10% 10% 9.9% 10.5% 11.0%
Case2 420 390 390 6,338 6,222 6,039
Change v.s. Base Case 20% 20% 20% 19.7% 21.0% 22.1%
Case3 315 293 293 4,773 4,602 4,401
Change v.s. Base Case -10% -10% -10% -9.9% -10.5% -11.0%
Source: Guotai Junan International.
Maintain the output assumptions and production costs assumption unchanged. The production progress of the
Company in the first half of 2012 were generally in line with previous target of the Company, only mine gold and copper was
slightly lower than 50%. However, the company is confident to accomplish the output target as several new mines commence
production in the second half year. Duobaoshan gold-copper mine commenced trial production since May, and it is expected
to contribute more gold and copper output in the second half year. Besides, the output of Ashele copper mine returned to
normal since 2Q2012 as the construction of new mining spot completed. Hence, we maintain the output assumptions of the
Company unchanged. The production costs of mined gold rose significantly in the first half year of 2012 due to lower ore
grade and rising costs of labor, material and energy. However, as we have taken all the negative factors into account, we also
maintain the productions costs unchanged.
Gold prices benefit from the recent launch of QE3 and is expected to continue to rise and stay at high levels in
4Q2012. Gold is always preferred by investors as a safe haven asset and the persistence of EU sovereign debt crisis will push
forward investment demand of gold, both from central banks and private investors. Additionally, the long-term low real interest
rate lower the opportunity costs of holding gold and further encourage the purchase of gold. The persistence of EU sovereign
debt crisis will undermine the credit of euro as a currency and push forward the currency demand of gold. We believe global
mined gold output will only increase moderately due to limited mine reserves. As a result, we expect gold prices to continue to
rise and stay at high levels in 4Q2012. We revise up our 2012 average gold prices assumption from RMB 325/g to RMB RMB
350/g, up by 7.7%, which is equivalent to about 1,700 US$/oz.
Revise up TP to HK$ 4.50 due to higher EPS estimation and PE valuation, upgrade to “Buy”. We maintain the output
assumptions as the Company is confident to accomplish the output target, we also maintain the production cost assumptions
unchanged because we have taken all the unfavorable factors into account. However, we revise up 2012 average gold prices
assumptions as the newly released QE3 helped to push forward gold prices. As a result, we revise FY12-14 EPS to RMB
0.243, 0.236 and 0.227, up by 8%, 9% and 9%, respectively. The profitability of mining business of the Company stays at high
levels as gold and copper prices stay at high level. So we believe the 15x PE valuation level is reasonable. Hence, we revise
up TP of Zijin Mining to HK$ 4.50 and upgrade to “Buy” rating.
See the last page for disclaimer Page 2 of 6
20 September 2012
Zijin Mining 紫金矿业 (02899 HK)
Company Report

Table 2 Key assumptions of Zijin
FY12
(Old)
FY12
(New)
Changes
(%)
FY13
(Old)
FY13
(New)
Changes
(%)
FY14
(Old)
FY14
(New)
Changes
(%)
Sales Volume
Mined Gold(ton) 30.0 30.0 0% 32.0 32.0 0% 33.5 33.5 0%
Copper(‘000 tons) 100.0 100.0 0% 110.0 110.0 0% 125.0 125.0 0%
Mined Zinc(‘000 tons) 42.0 42.0 0% 80.0 80.0 0% 100.0 100.0 0%
Price
Gold(Rmb/g) 325 350 8% 300 325 8% 300 325 8%
Copper(Rmb/t) 47,863 47,863 0% 49,573 49,573 0% 47,863 47,863 0%
Zinc(Rmb/t) 15,000 15,000 0% 14,250 14,250 0% 14,250 14,250 0%
Unit Cost
Mined Gold(Rmb/g) 106.9 106.9 0% 115.5 115.5 0% 124.7 124.7 0%
Copper(Rmb/t) 12,984 12,984 0% 14,023 14,023 0% 15,145 15,145 0%
Zinc(Rmb/t) 14,250 14,250 0% 13,538 13,538 0% 13,538 13,538 0%
SG&A/Revenue 6.0% 6.0% 0Pts 6.0% 6.0% 0Pts 6.0% 6.0% 0Pts
Interest rate 6.5% 6.5% 0Pts 6.5% 6.5% 0Pts 6.5% 6.5% 0Pts
Effective income tax 25.0% 25.0% 0Pts 25.0% 25.0% 0Pts 25.0% 25.0% 0Pts
Dividend payout ratio 30.0% 30.0% 0Pts 30.0% 30.0% 0Pts 30.0% 30.0% 0Pts
EPS 0.226 0.243 8% 0.217 0.236 9% 0.208 0.227 9%
Source: Guotai Junan International.
See the last page for disclaimer Page 3 of 6
20 September 2012
Zijin Mining 紫金矿业 (02899 HK)
Company Report

Table 3 Zijin’s Peer Comparison
Company Stock Code Currency Last price
PE PB
ROE(%)
11A 12F 13F 14F 11A 12F 13F 14F 12F
Barrick Gold Corp ABX CN CAD 41.65 9.7 10.3 8.6 9.2 1.9 1.6 1.4 1.3 17.6
Goldcorp Inc G CN CAD 45.70 22.2 24.4 16.3 13.9 1.7 1.7 1.6 1.4 7.8
Newcrest Mining Ltd NCM AU AUD 29.87 29.8 21.7 21.2 16.1 2.1 1.5 1.4 1.4 7.4
Newmont Mining Corp NEM US USD 56.85 13.9 14.2 11.5 12.0 2.3 2.0 1.8 1.6 13.2
Anglogold Ashanti Ltd ANG SJ ZAr 30,118 12.4 9.9 7.7 8.0 3.3 2.4 1.9 1.6 26.8
Kinross Gold Corp K CN CAD 10.10 15.1 14.5 9.8 10.5 1.1 0.9 0.8 0.8 6.3
Gold Fields Ltd GFI SJ ZAr 10,993 12.8 9.3 6.9 7.7 1.9 1.6 1.3 1.3 20.2
Simple Average 16.6 14.9 11.7 11.1 2.0 1.7 1.5 1.3 14.2
Weighted Average 16.9 16.0 12.5 11.6 2.0 1.7 1.5 1.4 13.3
Zijin Mining Group Co Ltd-A 601899 CH CNY 4.04 9.1 13.4 11.6 10.5 2.1 2.6 2.2 1.9 19.9
Shandong Gold Mining Co Lt-A 600547 CH CNY 41.54 21.2 23.4 19.1 16.8 7.1 7.0 5.3 4.1 32.6
Zhongjin Gold Corp-A 600489 CH CNY 17.95 18.2 24.3 20.4 18.0 4.0 4.5 3.7 2.9 19.2
Simple Average 16.2 20.4 17.0 15.1 4.4 4.7 3.7 3.0 23.9
Weighted Average 15.4 19.5 16.3 14.5 4.2 4.5 3.6 2.9 23.6
Zhaojin Mining Industry - H 1818 HK HKD 13.44 17.6 17.7 14.9 14.4 4.4 4.1 3.4 3.0 24.8
Zijin Mining Group Co Ltd-H 2899 HK HKD 3.16 9.1 10.2 9.4 9.7 2.1 1.9 1.7 1.5 19.0
China Gold International Res 2099 HK HKD 33.95 13.2 25.3 20.2 21.9 0.8 1.3 1.2 1.1 5.5
Lingbao Gold Co Ltd-H 3330 HK HKD 3.65 5.7 7.7 7.0 7.3 0.8 0.9 0.8 0.8 10.5
Simple Average 11.4 15.2 12.9 13.3 2.0 2.1 1.8 1.6 15.0
Weighted Average 11.6 13.4 11.7 12.0 2.5 2.4 2.1 1.8 19.2
Source: Bloomberg, Guotai Junan International.
See the last page for disclaimer Page 4 of 6
20 September 2012
Zijin Mining 紫金矿业 (02899 HK)
Company Report

Table 4 Financial Statements and Ratios
Income Statement Balance Sheet
Year end Dec 31st (RMB m) 2010A 2011A 2012F 2013F 2014F Year end Dec 31st (RMB m) 2010A 2011A 2012F 2013F 2014F
Revenue 28,540 39,764 43,696 46,321 52,819 Net PPE 12,557 16,627 19,319 20,713 21,853
COGS (18,337) (27,537) (32,311) (35,121) (41,528) Net intangibles 4,933 6,158 6,741 7,295 8,131
Gross profit 10,202 12,227 11,386 11,200 11,291 Others 4,202 3,101 3,414 3,483 3,831
SG&A (1,831) (2,043) (2,622) (2,779) (3,169) Non-current assets 27,341 33,941 37,660 39,849 42,392
Profit from operation 8,158 10,104 8,764 8,421 8,122
Finance costs (191) (496) (825) (770) (812) Cash&cash equivalents 4,383 7,158 7,865 8,338 9,507
Others (635) (332) 465 511 542 Trade receivables 669 895 983 1,042 1,188
Profit before tax and MI 7,332 9,276 8,404 8,162 7,852 Inventories 3,483 4,772 5,244 5,559 6,338
Income tax (1,576) (2,366) (2,101) (2,041) (1,963) Others 2,526 3,447 3,788 4,016 4,417
Profit before MI 5,756 6,911 6,303 6,122 5,889 Current assets 11,061 16,271 17,880 18,954 21,451
Minority interests (928) (1,198) (1,008) (979) (942)
Net profit 4,828 5,713 5,294 5,142 4,947 Total assets 38,401 50,212 55,540 58,804 63,843
Dividend (1,454) (1,714) (1,588) (1,543) (1,484)
Long-term borrowings 2,303 4,900 3,780 3,080 4,225
EPS 0.221 0.262 0.243 0.236 0.227 Others 433 433 441 436 437
DPS 0.067 0.079 0.073 0.071 0.068 Non-current liabilities 2,736 5,333 4,221 3,516 4,662
Cash Flow Statement
Year end Dec 31st (RMB m) 2010A 2011A 2012F 2013F 2014F Short-term borrowings 5,280 7,784 8,929 7,898 9,772
Trade payables 3,673 5,117 5,624 5,961 6,797
Net income 4,828 5,713 5,294 5,142 4,947 Others 684 752 827 910 1,001
Changes in WC (513) (70) (54) (36) (90) Current liabilities 9,636 13,653 15,379 14,769 17,570
Adjust for depre.&amort. 1,155 1,473 1,828 2,120 2,365
Others 450 339 1,429 1,690 (2,077) Total Liabilities 12,373 18,987 19,600 18,284 22,232
Cash flows from operating 5,920 7,454 8,497 8,916 5,145
Minority interests 4,197 5,395 6,404 7,383 8,325
Capex (3,995) (7,000) (5,400) (4,400) (4,700) Shareholder’s equity 21,832 25,830 29,536 33,136 36,599
Others (2,297) 0 0 0 0
Cash flows from investing (6,292) (7,000) (5,400) (4,400) (4,700)
Financial Ratios
Share issue 0 0 0 0 0 Year end Dec 31st 2010A 2011A 2012F 2013F 2014F
Net bank borrowings 3,718 5,101 24 (1,731) 3,020
Dividend paid (1,454) (1,714) (1,588) (1,543) (1,484) Gross Margin 35.7% 30.7% 26.1% 24.2% 21.4%
Others (1,079) (496) (825) (770) (812) Net Margin 16.9% 14.4% 12.1% 11.1% 9.4%
Cash flows from financing 1,185 2,891 (2,389) (4,044) 724 ROE 24.1% 24.0% 19.1% 16.4% 14.2%
ROA 14.2% 12.9% 10.0% 9.0% 8.1%
Net change in cash 814 3,345 708 472 1,170 ROCE 26.2% 26.7% 23.0% 20.3% 18.7%
Cash at beginning of year 2,999 3,813 7,158 7,865 8,338 Free CF(Rmb mn) 1,925 454 3,097 4,516 445
Cash at end of year 3,813 7,158 7,865 8,338 9,507
Source: the Company, Guotai Junan International.
Net Gearing 16.0% 23.2% 17.5% 8.4% 12.9%
See the last page for disclaimer Page 5 of 6
20 September 2012
Zijin Mining 紫金矿业 (02899 HK)
Company Report

Company Rating Definition
The Benchmark: Hong Kong Hang Seng Index
Time Horizon: 6 to 18 months
Rating Definition
Buy Relative Performance >15%;
or the fundamental outlook of the company or sector is favorable.
Accumulate Relative Performance is 5% to 15%;
or the fundamental outlook of the company or sector is favorable.
Neutral Relative Performance is -5% to 5%;
or the fundamental outlook of the company or sector is neutral.
Reduce Relative Performance is -5% to -15%;
or the fundamental outlook of the company or sector is unfavorable.
Sell Relative Performance 5%;
or the fundamental outlook of the sector is favorable.
Neutral Relative Performance is -5% to 5%;
or the fundamental outlook of the sector is neutral.
Underperform Relative Performance