Morgan Stanley: SD GOLD Q3 Results Miss Expectations, Maintains Equal-Weight Rating

Stock News10-29

According to a research report released by Morgan Stanley, SD GOLD (01787) posted weaker-than-expected third-quarter results, which undermines the investment case for the stock; the bank maintained its Equal-Weight rating and target price of HK$21.2.

The bank noted that the company's net profit for the first nine months of 2026 was RMB 3.2 billion, down 19.6% year on year; the third quarter recorded a net loss of RMB 363 million, compared with a profit of RMB 2.1 billion in the second quarter and a profit of RMB 1.1 billion in the third quarter of 2025.

The third-quarter performance was dragged down by lower sales volumes following reduced output, a quarter-on-quarter decline in gross profit that was larger than the drop in the gold price and gold production, as well as a higher effective tax rate and an expanded allocation of minority interests.

The bank noted that the company had earlier lowered its 2026 production target from 49 tonnes to 36 to 38 tonnes, implying fourth-quarter output of approximately 10 to 12 tonnes. Sales in the first nine months were 28.6 tonnes, with 2.4 tonnes of inventory consumed, and inventory drawdown is expected to continue in the fourth quarter, providing some support to earnings.

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