Gold prices are booming. Why is the Q3 performance of Shandong Gold (01787) different from the stock price?

On October 15, international gold reached a new record high, drawing widespread attention from the outside world. As of 10 a.m., COMEX gold had broken through the 4,200 US dollars/ounce mark, hitting a high of 4205.8 US dollars/ounce; London spot gold had broken through the 4,180 US dollars/ounce mark, hitting a high of 4186.8 US dollars/ounce.

However, what is in stark contrast to this is Shandong Gold (01787, 600547.SH), a gold concept stock that fell after profit.

On the 15th, against the backdrop of rising gold prices, the sharp green performance of Shandong Gold's AH shares was particularly remarkable. Among them, Shandong Gold's H shares fell rapidly in early trading. At one point, they fell more than 7% during the intraday period, and their share price fell 3.35% to HK$38.68 at the close; at the same time, its A share price also fell sharply in early trading, falling more than 6% at one point. By the close, its A share price fell 2.77% to 41.7 yuan. It presents a completely different “indifferent” atmosphere from the fiery price of gold, which has set a new record high.

More importantly, it was only on October 14 that Shandong Gold officially revealed the earnings forecast. According to forecasts, Shandong Gold expects net profit attributable to parent company owners for the first three quarters to be 3.80 billion yuan to 4.10 billion yuan, an increase of 83.9% to 98.5% over the previous year. Regarding the reason for the increase in performance, Shandong Gold said that during the reporting period, the company optimized production layout, strengthened technical research, improved the level of fine management, and significantly improved operational efficiency, compounded the rise in gold prices, and profits increased dramatically over the same period last year.

International gold prices continue to reach new highs, compounding positive results. Why is Shandong gold still experiencing a divergence in falling stock prices?

The month-on-month growth rate is slowing vs. the release of production capacity for multiple construction projects is expected

Zhitong Finance has observed that Shandong's gold profit and then declined, or was the result of a combination of “internal favorable quality doubts” and a “strong external negative environment.”

From our own perspective, there is no shortage of reasons why the month-on-month growth rate slowed significantly, and market expectations were lost after being fulfilled.

Although the company's net profit increased by 83.9% to 98.5% year-on-year in the first three quarters, the net profit growth rate for the third quarter slowed significantly compared to the second quarter. In the first and second quarters of this year, Shandong Gold's net profit was 1,026 billion yuan and 1,782 billion yuan, respectively. According to this estimate, the company's net profit for the third quarter is expected to be around 1.1 billion yuan. Although the year-on-year growth rate is over 60%, it has shrunk by about 40% compared to the second quarter. The company announcement explained that short-term costs have risen mainly due to increased investment in mine infrastructure, adjustment of marginal grade, and self-commercialization transformation.

Furthermore, prior to the announcement, Shandong Gold A shares had been rising for three consecutive days (up and down on October 9, up 5.7% on October 13), with a cumulative increase of more than 15%, and the market absorbed performance growth expectations ahead of schedule. After the opening of the market on October 15, some of the funds chose to settle in the bag, causing the stock price to move higher and lower. This “good is all bad” phenomenon is quite common in stories.

Judging from the external environment, risk aversion has weakened marginally and sector rotation effects, and the overall gold sector is in a pullback state.

In mid-October, although the conflict between Palestine and Israel continued, market concerns about its spillover effects cooled down. Gold's appeal as a safe-haven asset has declined, and capital is more inclined to chase high-dividend or growth stocks. Furthermore, on October 15, the overall gold sector recovered, making it difficult for individual stocks to stand alone. For example, Chifeng Gold and its peers all fell in price, reflecting a shift in the market's valuation logic of gold stocks from “gold price driven” to “performance sustainability.”

However, it should be pointed out that although the growth rate of gold performance in Shandong has slowed month-on-month, judging from the performance of the past year or two, the gold business in Shandong has shown a continuous upward trend as the price of gold continues to rise.

In the first half of 2025, the company achieved operating income of 56.766 billion yuan, an increase of 24.01% year on year; net profit to mother was 2,808 billion yuan, up 102.98% year on year; net profit to mother after deducting non-recurring profit and loss was 2,810 billion yuan, an increase of 98.74% year on year.

Looking at a single quarter, in 25Q2, the company achieved revenue of 30.83 billion yuan, a year-on-year increase of 14.97%, a month-on-month increase of 18.87%, and net profit to mother of 1,782 billion yuan, an increase of 160.53% year-on-year and 73.68 month-on-month, all of which achieved significant year-on-month growth.

From the project side, Shandong Gold's key projects are progressing smoothly, which is expected to help the company achieve its long-term production targets, thereby encouraging the company's performance to maintain a steady growth trend.

In the first half of 2025, the company's Sanshan Island Gold Mine sub-well project reached an elevation of 1900 meters, setting a new domestic deep well record. At the same time, it also promoted the processing of the 15,000 tons/day expansion project approval, installation review, etc. to ensure that the project has full construction conditions as soon as possible; of the 5 main control shaft projects designed by the Jiaojia Gold Mine Resource Integration Project, 4 have already been successfully excavated to the end, and construction of supporting loading and unloading, drainage and distribution, and transportation lanes is being promoted in an orderly manner to fully ensure construction progress; the Xincheng Gold Mine Resource Integration Project integrates 4 resources All major shaft projects have been excavated to the end Construction of underground drainage and distribution systems and powder ore recycling systems is being carried out, and excavation and construction of Huifengshimen roadway and major transportation roadways are being promoted simultaneously.

Furthermore, in terms of overseas projects, the production system joint commissioning and testing of Catino's Namutini gold mine project is continuing to test the decline in production capacity, and the overall production situation is steady, moderate and improving. The Namibian Osino project, which was acquired by Yamakin International in 2024, is progressing efficiently. The plant selection and construction plan is to fully begin in the fourth quarter of this year, and production is expected to be put into operation in the first half of 2027.

Based on the above, it is easy to see that Shandong Gold's “decline after profit” is the result of multiple factors resonating: in the short term, the month-on-month decline in profit, reversal of market sentiment, and technical adjustments dominated the stock price trend; in the long run, the company's production capacity release (such as the Catino project) and cost optimization (such as self-employment transformation) still have potential.

The international gold price has broken through the 4,000 US dollar mark. Has it peaked?

The price of gold is an important factor affecting the performance of gold concept stocks. The international gold price breaking through the 4,000 US dollar mark is obviously a message worth taking a deep look at.

On October 8, 2025, international gold prices ushered in a historic moment. The price of gold futures on the New York Mercantile Exchange (COMEX) broke through the intraday mark of 4,000 US dollars/ounce, hitting a high of 4081 US dollars/ounce; the London spot gold price also rose at the same time, reaching a high of 4059.31 US dollars/ounce.

Judging from the core drivers, there are three main factors for the international gold price to break through the $4,000 mark.

First, risk aversion has heated up dramatically in the short term under the influence of factors such as the continued “shutdown” of the US federal government and the escalation of geopolitical conflicts. Specifically, the “shutdown” of the US federal government continues, and the market lacks clear guidance on economic prospects, driving the influx of safe-haven funds into gold. At the same time, the combination of factors such as the turbulent situation in the Middle East has also significantly increased the safe-haven appeal of gold. At this point, people's concerns about political and institutional risks have intensified, and the “Fear and Greed Index” has shown a steady downward trend. It is approaching the level of 50 points, gradually approaching the “fear” range.

Second, expectations for the Federal Reserve to cut interest rates continue to strengthen. According to data from the CME Federal Reserve's observation tool, the probability of cutting interest rates by another 25 basis points at the October 29 meeting is still as high as 95%. The low interest rate environment reduces the opportunity cost of holding gold and boosts the price of gold. Meanwhile, the continued expectation of interest rate cuts has led to a steady decline in 10-year US Treasury yields, which are currently hovering around the 4% mark. As a natural alternative to safe-haven assets and bonds, gold is benefiting from falling yields.

Third, there is a structural inflow of capital. On the one hand, the central bank's demand for gold purchases is steady: according to World Gold Council data, the global central bank's net gold purchase volume reached 415 tons in the first half of 2025 (although the year-on-year decrease was 21%, but still significantly higher than the five-year average); on the other hand, investment demand surged: SPDR, the world's largest gold ETF, increased its holdings to 1014.58 tons on October 8, reaching a record high. The influx of private investors into gold ETFs has become another driving force behind this round of gold price increases.

However, just one day later, on October 9, international gold prices ushered in a “diving” market. Spot gold prices fell below the $4,000 per ounce mark, and New York futures plummeted by more than 1.9%. The rapid decline in gold prices this time after reaching a record high has drawn widespread attention from the market to the future trend of gold.

So, what is worth paying attention to is that international gold prices are blocked after crossing the $4,000 per ounce mark. Has it already peaked?

Among them, Caida Futures believes that it is currently impossible to draw the conclusion that the price of gold has reached its peak in history, whether from a technical or fundamental point of view, and it is more likely that the rise will be relayed. Because judging from the fundamentals of gold, the Israel-Palestine conflict is only a local regional conflict, but geopolitical conflicts, including the Russian-Ukrainian conflict, are still rising one after another. The impact of a series of practices that disrupted the world pattern in internal affairs and diplomacy during Trump's administration still spread and led to an increase in uncertainty. The trend of central banks reducing their holdings of dollars and increasing their gold holdings as international reserves continues. There is still plenty of room for the Federal Reserve to cut interest rates further. These are all important factors supporting the price of gold and silver, and have not changed at present.

Guoxin Securities, on the other hand, pointed out that the correction after the gold price broke through 4,000 US dollars was mainly a normal reaction to excessive short-term increases, US economic data exceeding expectations, and easing the margins of geopolitical risk. The logic that supports the long-term rise in gold prices has not changed, and factors such as the slowdown in global economic growth and the risk of a debt crisis will still support the price of gold. A pullback can be viewed as a buying opportunity rather than a sign of a bull market turning into a bear. In the short term, the pullback is a layout opportunity. The support level focuses on 3,950 US dollars (international), while focusing on the strength and weakness of the US dollar index and the Fed's interest rate meeting; in the medium to long term, the gold allocation ratio is maintained, and investment targets are preferred: gold ETFs, physical gold, and gold mining stocks, such as Zijin Mining (H/A shares) and Shandong Gold (H/A shares), with significant leverage effects.

Overall, as a leader in the gold industry with solid fundamentals and clear strategies, the short-term decline in stock prices will not affect the company's long-term growth. For long-term investors, Shandong Gold is a high-quality target for sharing the dividends of the gold bull market. Its outstanding resource reserves, production scale, and internationalization support its long-term value.