Hong Kong Stock Market Review: Gold Price Hits a New High

Gold price hits a new high again, coupled with the improvement in the US stock market, gold stocks are also rebounding.

In the first half of the year when copper and gold hit new highs, it was mentioned that the dividend yield of most companies is not high, the PB ratio is also high, and the safety margin is not high. Therefore, even if the gold price continues to rise, stock prices are inevitable to experience a pullback. Moreover, since many businesses include copper, the current copper price has fallen back to the level of early March, which has a greater impact on profits.

Of course, there are individual factors at play, such as CHINAGOLDINTL. In the first half of the year, revenue and profits plummeted due to the main mine, Jiamak mine, being shut down. Although production only resumed at the end of May, the daily ore processing volume dropped significantly. Additionally, with reduced mining rates at the Changshanha mine, gold production in the first half of the year decreased by nearly half. It may take some time for these mines to fully recover, hence the company's stock price has returned to its original level.

As for LINGBAO GOLD, the main business is gold sales, so the stock price has performed relatively well. Although the company had a mine shut down for two months in the first half of the year due to regulatory requirements, leading to a 38% decrease in gold production and a 27% decrease in revenue, the profit increased by 27% to 150 million due to a larger increase in gold price. If there are no shutdowns in the second half of the year, coupled with the high gold price, profits are expected to increase significantly.

However, it is worth noting that the company has conducted a total of 3 additional share issuances in the second half of last year and the first half of this year, resulting in a 23% decrease in earnings per share. In addition, the company recently announced the full circulation of H shares, approximately 386 million shares, accounting for about 68% of the total domestic shares.

With continuous additional share issuances, full circulation of H shares, and the issuance of equity incentives, it seems that the major shareholders have some ideas after taking over for more than eight years in this current cycle of rising gold prices.

Still, in the current environment, the performance of mining companies is like opening a blind box, especially for smaller companies, which are constantly affected by mine shutdowns. While they have decent resilience, the risks are also significant