CGN MINING(1164.HK)：PROFIT ALERT MAINLY RELATED TO ONE-OFF ITEMS; CORE PROFIT REMAINS INTACT-格隆汇

机构：招银国际
研究员：Wayne FUNG

　　CGN Mining released a profit alert yesterday after market close. Net profit after tax in 2024 is expected to drop HK$130-180mn YoY. The decline was due to (1) one-off payment of dividend withholding tax, which is well-expected by the market; (2) the change in fair value from share swaps for Paladin Energy (PDN AU, Not Rated), which is non-operational. Excluding these items, pretax profit from continuing operations in 2024 is expected to increase by HK$230-280mn YoY, according to the Company. We estimate this implies pretax profit growth of 41-50% YoY in 2024, which is slightly better than our forecast. CGN Mining will release the full year results on 20 Mar. We maintain our BUY rating with a target price of HK$2.36, based on 3x NPV.
　　Dividend withholding tax paid in 1H24. CGN Mining reported a 2.8x YoY increase in income tax expenses in 1H24 (to HK$210mn). This was due to a one-off dividend withholding tax payment (accrued for years) as mandated by recent changes of Kazakhstan’s tax policies. We expect the effective tax rate will return to normal starting in 2025E.
　　Fair value loss due to Paladin Energy’s acquisition. In Dec 2024, Paladin Energy announced that it acquired all shares of Fission Uranium, an associate of CGN Mining. Under this share swap acquisition, the 11.26% equity interest in Fission Uranium originally held by CGN Mining was fully converted to a 2.61% equity interest in Paladin Energy. Such conversion resulted in a loss from discontinued operations.
　　Post-results analyst meeting. CGN Mining will host analyst meeting & conference call on 21 Mar. Please contact us for details.