Investment Highlights:
On August 18, 2025, Shanjin International Gold Co.,Ltd. released its semi-annual report, showing continued high growth in revenue and net profit. In the first half of 2025, the company achieved operating revenue of RMB 9.246 billion, up 42.14% year-on-year, and net profit attributable to shareholders of RMB 1.596 billion, up 48.43% year-on-year, setting a new historical high for semi-annual performance.
Mine gold production and sales data declined slightly. In the first half of 2025, the company achieved mine gold production of 3.72 tons, down 10.58% year-on-year; mine gold sales volume reached 4.12 tons, down 6.58% year-on-year.
Dual-drive approach of resource expansion and acquisitions. Heihe Luoke and Qinghai Dachaidan are the main gold mining resource production entities of the company. While ensuring stable gold mine production, these two major mining areas continue to focus on exploration and resource expansion to address resource continuity issues. In the first half of 2025, exploration work in the periphery of Dong'an Gold Mine in Heihe mining area and the deep exploration of Qinglonggou Gold Mine in Qinghai Dachaidan mining area achieved significant results, with geological exploration adding 3.85 tons of new gold metal reserves with a grade of 5.79 grams per ton.
Clear timeline for overseas project construction. According to information disclosed in the interim report, the mine processing plant construction plan is expected to commence comprehensively in the fourth quarter, with construction work to be completed in the first half of 2027. This project represents Shanjin International Gold Co.,Ltd.'s first attempt at overseas mine acquisition.
Accelerating international capital market layout. On June 20, 2025, the company announced the official launch of preparatory work for overseas share issuance (H shares) and listing on the Hong Kong Stock Exchange. This initiative represents another significant attempt by the company to implement its internationalization strategy. Listing on the Hong Kong Stock Exchange can help the enterprise accelerate overseas business development, consolidate its industry position, while better utilizing the advantages of international capital markets to optimize capital structure, expand diversified financing channels, and further promote the implementation of long-term high-quality resource acquisition projects.
The unexpected decline in U.S. employment data in July marks an important event node for Federal Reserve monetary policy adjustments. Under the influence of a series of radical policies including tariffs, immigration, and government layoffs by the Trump administration, the U.S. labor market is rapidly cooling, and economic fundamentals are shifting into low gear.
As one of the commodities with the strongest financial attributes, rising expectations of interest rate cuts and marginal loosening of liquidity will restore upward momentum for gold prices. Referring to historical patterns, gold price turning points typically lead Federal Reserve monetary policy adjustment nodes by 1-2 months in preventive rate-cutting cycles. With the September rate cut approaching, Federal Reserve monetary policy adjustments are expected to replace tariffs as the main trading logic in the gold market in the short term, with gold prices expected to trend upward with volatility.
Deep erosion of Federal Reserve independence. In our analysis, we proposed that changes in Federal Reserve Chair appointments represent another key event node for gold allocation within the year. The early departure of Federal Reserve Governor Adriana Kugler provides an opportunity for Trump to appoint a "shadow chair." Current leading candidates' policy positions largely align with Trump's, with recent statements leaning toward promoting more accommodative monetary policy to cater to Trump's rate-cutting demands. When political appointments replace central bank authority, the impact on capital markets may trigger widespread market risk-aversion demand.
Although July non-farm employment data cooled, the impact of tariffs on economic fundamentals remains limited. Federal Reserve rate cuts are more of a preemptive operation, namely preventive rate cuts. Referencing gold market performance in past preventive rate-cutting cycles, limited by the magnitude and duration of rate cuts, gold price gains are typically constrained. We note that against the backdrop of marginal easing in tariffs and geopolitical risks, and receding risk-aversion demand, the gold market lacks additional upward momentum. We judge that gold prices will find it difficult to break through previous highs within the year.
We forecast the company's operating revenue for 2025-2027 to be RMB 18.021 billion, RMB 19.898 billion, and RMB 22.680 billion respectively, with net profit attributable to shareholders of RMB 3.431 billion, RMB 4.307 billion, and RMB 5.599 billion respectively. The company's current market capitalization corresponds to P/E ratios of 14.62x, 11.64x, and 8.96x respectively. Referencing comparable companies and considering the company's annual performance, we assign an Overweight rating to the company.
Risk Warning: Key project progress falling short of expectations, unexpected adjustments in gold prices, etc.
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