Gold Breaks $2800: Mining Stocks Soar

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Recently, international gold prices have been soaring, with COMEX gold temporarily breaching the $2800 per ounce mark, and retail prices for gold jewelry in China exceeding 800 yuan per gramAs a result, investors are keenly interested in the quarterly reports of gold mining companies listed on China's A-share market

As of the deadline for third-quarter report disclosures on October 31, gold mining companies specializing in gold extraction have generally reported impressive earnings, benefiting from the rising gold prices


According to the statistics, the eight listed gold mining companies on A-shares collectively achieved a total operating income of 434.39 billion yuan and a net profit attributable to shareholders of 31.626 billion yuan in the first three quarters, equating to a monthly profit of 3.514 billion yuan

In terms of growth rates, these companies have reported an average revenue growth rate of 21.57% and an astonishing average net profit growth rate of 94.88% for the first three quarters, placing them at the forefront of A-share industries



Among them, Western Gold (601069.SH) saw its net profit attributable to parent company skyrocket by 402.5% year-on-year, while Chifeng Gold (600988.SH) also doubled its net profit with a growth rate of 112.59%. Hunan Gold (002155.SZ) reported a 73.56% rise in net profit, and Zijin Mining (601899.SH) and Shandong Gold (600547.SH) experienced respective profit increases of 50.68% and 53.57%.

The significant growth in performance has also driven up the stock prices of these gold companies

By November 1, with the exception of Sichuan Gold (001337.SZ) listed in 2023, all A-share gold mining stocks reported price increases this year, with Hunan Gold rising by 58%, China National Gold (600489.SH) increasing by 48%, and Zijin Mining, Chifeng Gold, and Shandong Gold going up by 41%, 34%, and 15%, respectively

“The sharp increase in gold prices this year, especially the notable rise in the third quarter, directly benefited the quarterly performance of A-share gold mining companiesThe price boost created a profit elasticity for these stocks while the optimistic outlook opened up valuation space,” an industry insider commented to our reporter

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Surge in Gold Mining Stock Performance

Analyzing the revenue data from the gold mining companies, Zijin Mining topped the list with an impressive revenue of 230.396 billion yuan, followed closely by Shandong Gold with 67.006 billion yuan, and Hengbang Co., Ltd (002237.SZ) at 58.16 billion yuanChina National Gold and Hunan Gold ranked fourth and fifth with revenues of 46.04 billion yuan and 20.99 billion yuan, respectively

In contrast, Chifeng Gold, Western Gold, and Sichuan Gold's revenues fell short of 10 billion, at 6.223 billion yuan, 5.045 billion yuan, and 527 million yuan, placing them in sixth through eighth place

Regarding the revenue growth rate, two companies reported growth rates exceeding 50%, with Shandong Gold's revenue growing by an impressive 62.15% year-on-year, and Western Gold achieving a growth rate of 51.61%.

The financial reports indicate that the surge in gold prices has been a crucial factor contributing to the revenue growth of these companies.Shandong Gold's report highlighted that its substantial revenue increase stemmed from rising sales prices of self-produced and purchased gold, alongside its acquisition of Shanjin International

Western Gold attributed its remarkable revenue growth to increased sales volumes and prices of its gold products compared to the same period last year

In terms of net profit attributable to shareholders, Zijin Mining's net profit reached 24.357 billion yuan, far surpassing the second-place competitorChina National Gold and Shandong Gold followed with net profits of 2.643 billion yuan and 2.066 billion yuan, respectively, both exceeding 2 billion yuan in net profit

Chifeng Gold, Hunan Gold, Hengbang Co., Ltd, Sichuan Gold, and Western Gold reported net profits of 1.105 billion yuan, 666 million yuan, 464 million yuan, 197 million, and 128 million yuan, placing them in the fourth to eighth spots

Analyzing the growth rates of net profit attributable to shareholders, the gold mining companies displayed notable profit elasticity due to the rising gold pricesSmall-scale gold mining companies like Western Gold, Chifeng Gold, and Hunan Gold exhibited the best profit elasticity, with net profit growth rates of 402.5%, 112.59%, and 73.56% respectively for the first three quarters



Western Gold, which saw the highest net profit growth rate, turned around from a net loss of 42.52 million yuan in 2023 to profitability this year. This success was attributed to increased sales volumes and prices of gold products from its mines compared to the previous yearChifeng Gold's doubling of net profit was due to the rise in sales and prices of its gold products, along with effective cost control

Hunan Gold reported significant growth driven mainly by a year-on-year increase of 19.36% in the sales price of gold and a 43.33% increase in the sale price of refined antimony

Both Shandong Gold and Zijin Mining, larger-scale gold mining companies, also demonstrated strong net profit growth, with Shandong Gold reaching a net profit growth rate of 53.57% and Zijin Mining achieving 50.68%. The companies with the lowest profit growth rates, such as China National Gold, Sichuan Gold, and Hengbang Co., Ltd, still managed to demonstrate double-digit growth rates of 27.55%, 25.38%, and 13.23%, respectively

Who Has More Gold Mines?

The amount of gold that mining companies possess is a crucial factor influencing their profitability during periods of rising gold prices

From the perspective of gold resources each listed company possesses, Zijin Mining tops the list with a total of 3528 tons of gold resourcesShandong Gold follows with 1431 tons, while China National Gold holds 892 tons, ranking thirdChifeng Gold, Hengbang Co., Ltd, Hunan Gold, Sichuan Gold, and Western Gold possess 454 tons, 150 tons, 142 tons, 31 tons, and 30 tons, respectively

It is noteworthy that Zijin Mining's considerable resources allow it to outperform all other gold mining companies in terms of both revenue scale and net profitIn the first three quarters, Zijin Mining reported revenue of 230.396 billion yuan, which accounted for an impressive 53.04% of the total revenue from gold mining stocks

Furthermore, its net profit of 24.357 billion yuan comprised 77.02% of the total net profit for gold mining stocks
According to financial reports, as of the first half of 2024, Zijin Mining claimed 3528 tons of gold resources, 28380 tons of silver resources, and 10.467 million tons of copper resources
Zijin Mining is also the highest-valued gold mining company on the A-share market, with a market capitalization of 458.47 billion yuan as of November 1, ranking 24th among all A-share companies



Furthermore, Zijin Mining is highly favored by institutional investors, ranking sixth in the list of heavily invested funds by the end of the third quarter, with a fund-held market value of approximately 61.127 billion yuanIt has also attracted foreign capital, represented by QFII (Qualified Foreign Institutional Investor), holding a market value of around 25.939 billion yuan at the end of Q3, ranking sixth in QFII's heavily invested stocks

Additionally, Zijin Mining has attracted attention from sunshine private equity, with a total market value of 6.07 billion yuan observed at the end of Q3, ranking second among sunshine private equity heavily invested stocks

Notably, star fund manager Deng Xiaofeng managed a significant fund in High Yi Asset, possessing 180.3 million shares, valued at approximately 3.1 billion yuanHowever, per Zijin Mining's third-quarter report, Deng chose to take profits during the gold price surge, reducing his holdings of Zijin Mining shares by 94.1 million, or 34.27%.

For gold mining stocks, the sustained ability to maintain such strong profitability will ultimately depend on international gold price trends in the future
Many analysts believe that during the Federal Reserve's interest rate cut cycle, international gold prices will continue to show strong performance, especially with uncertainties in the US situation and escalating conflicts in the Middle East, which provide support for gold as a safe-haven investment



The World Bank's latest report released on October 29 predicts that gold prices will reach historical highs this yearGoldman Sachs has projected that by the end of 2025, international gold prices will rise to $3000 per ounceHowever, some analysts caution the risks of rising inflation in the US and the potential slowdown of the Fed's easing path

“The performance of gold mining stocks closely correlates with stock price trends and gold prices

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