HSBC Research initiates a "Buy" rating on ZIJIN GOLD INTL, expecting the company to enter a growth phase in the coming years

HSBC Global Research published a report stating that as ZIJIN GOLD INTL (02259.HK) increases production from its various mines, the company will enter a growth phase this year, thanks to its strong balance sheet. The company's good cost control and successful turnaround of underperforming assets support its profit margins. HSBC initiates a "Buy" rating for the stock with a target price of HKD 178; it estimates that for every 1% increase in gold prices, there is approximately a 1.4% upside in earnings.

HSBC expects that with the support of existing mines and recently acquired assets (including the Akyem and Raygorodok mines), the company's production will increase from an estimated 50 tons this year to an estimated 65 tons by 2027. The company's global layout provides diversification and visibility; optimizing newly acquired assets will bring further upside potential.

HSBC stated that the company's leverage is lower than its peers, allowing it to pursue more acquisitions and support internal growth. It forecasts that driven by increased production, improved profit margins, and gold price leverage, the company's earnings compound annual growth rate from 2024 to 2027 will reach 86%.

According to HSBC's sensitivity analysis, for every 1% change in gold prices or sales volume, ZIJIN GOLD INTL's earnings in 2026 will change by 1.4% or 1%, respectively. It also believes that driven by strong earnings growth, the stock price has about a 30% upside potential