Market Overview - The US stock market was closed on July 4th for Independence Day [1] Hong Kong Stock Market Highlights - Yum China (09987) rose over 3% after announcing the establishment of an innovation fund to convert operational needs into practical applications [2] - H&H International Holdings (01112) fell over 7%, expecting a 45% to 65% decline in net profit for the first half of the year [2] - China Rare Earth Holdings (03788) surged nearly 9% as it plans to spin off its gold business for independent listing on the Hong Kong Stock Exchange, potentially seeking financing before the spin-off [2] - Health Road (02587) jumped over 18% as its controlling shareholder voluntarily extended the lock-up period, focusing on digital health services [2] - Smoore International (06969) increased over 5% with the launch of Glo Hilo in Japan, maintaining high profit margins [2] - Tencent Music (01698) rose nearly 3% as institutions noted that recent acquisition plans would enhance overall content supply [2] - Jihong Co., Ltd. (02603) surged over 7%, with a projected net profit increase of over 55% year-on-year for the first half [2] - Solar stocks collectively declined, with Xinyi Solar (00968) down 4.86%, Fuyao Glass (06865) down 3.88%, New Energy (01799) down 3.19%, and Xinyi Glass (00868) down 2.64% [2] Other Notable Movements - Kuaishou-W (01024) rose over 3% as it plans to launch a live streaming initiative across multiple cities to create a collaborative ecosystem [3] - Gold stocks faced pressure, with Shandong Gold (01787) down 5.09%, China Gold International (02099) down 3.44%, Lingbao Gold (03330) down 2.68%, and Chifeng Jilong Gold (06693) down 2.33% [3] - China Shipbuilding Defense (00317) increased over 3% after the approval of a merger and acquisition restructuring plan, optimizing resources in the shipbuilding industry [3] - Medical device stocks saw a broad increase, with Spring Medical (01858) up 6.36%, Yongsheng Medical (01612) up 7.27%, Xinwei Medical-B (06609) up 3.55%, and Microneuroscience (02172) up 1.12% [3] - Some stablecoin concept stocks rose, with Victory Securities (08540) up 6.9%, Guotai Junan International (01788) up 5.15%, Yika (09923) up 2.59%, and China Everbright Holdings (00165) up 1.96% [3] - SF Express City (09699) rose nearly 7% amid intensified competition in the food delivery sector, with expectations of increased order volume [3] - HSSP International (03626) fell over 20% after being named by the Hong Kong Securities and Futures Commission for high stock concentration [3] Strategic Partnerships and New Listings - Shengye (06069) opened nearly 15% higher after forming a strategic partnership with Stand Robot to enhance its robotics industry chain [4] - Beverage stocks opened high, with Cha Bai Dao (02555) up 15%, Nayuki's Tea (02150) up 9.87%, Gu Ming (01364) up 5.77%, Hu Shang Ayi (02589) up 2.99%, and Mixue Group (02097) up 2.92% [4] - FWD Group (01828) had a flat opening on its first day of listing, being a life insurance company under Li Zeqiang's control [4]

Core Viewpoint - Investors should adopt a broad perspective and not limit themselves to a single industry or company, seeking undervalued opportunities across the market and being ready to switch strategies for maximizing returns [2][3]. Investment Strategies - The first investment strategy is suitable for investors who are broad-minded, diligent, and flexible. This approach involves continuously searching for undervalued stocks across various industries [4]. - The second investment strategy focuses on identifying a specific industry and company, particularly during the bottom of a cycle, to buy and sell at the peak, capturing most of the gains from that company's performance during the industry cycle [5][6]. - For growth stocks, the strategy involves investing in companies with low market penetration that are leaders in their sector, buying during their early growth phase and selling during their stable growth phase [5]. Investor Characteristics - The first strategy is ideal for investors with a broad, active, and adaptable nature, while the second strategy is more suited for those who are deep, relatively passive, and committed to specific stocks [6][7]. - Both strategies have their own merits and risks, and successful execution can lead to high investment returns [7]. Example in Gold Stocks - Investors with broad characteristics can switch among various gold stocks like Zhongjin Gold, Libo Gold, and Shandong Gold to maximize returns, while those with a deeper focus may choose to hold onto a single gold stock throughout the investment period [7]. Snowball Three-Point Method - The Snowball Three-Point Method emphasizes long-term investment and asset allocation through diversification across assets, markets, and timing to achieve diversified sources of returns and risk mitigation [8].

Group 1 - The company is a leading gold mining enterprise in Henan Province, with a production scale of 7,000 tons of ore per day and an expected gold production of 5.2 tons in 2024, accounting for 1.37% of domestic gold output [1] - The company's revenue from gold bullion business is projected to constitute 96.8% of its pre-tax income in 2024 [1] - The company holds mining and exploration rights across five provinces in China and Kyrgyzstan, with a total exploration area of 216.04 square kilometers and an estimated total gold reserve of approximately 131.81 tons (about 4.1 million ounces) by the end of 2024 [1] Group 2 - The company has five major mining bases and a smelting processing enterprise, with a net profit margin of 43.1% in 2024, significantly up from 29.8% in 2023 [2] - The domestic mining segment has a net profit margin of 47.4%, while the overseas segment has a margin of 4.1%, benefiting from rising gold prices and various operational improvements [2] - The company’s core mining area is located in the Xiaoqinling mineralization belt, with an average gold resource grade of 5.56 grams per ton in 2024, which is higher than the industry average [2] Group 3 - The company's strategic goals include focusing on exploration and expanding mining production capacity, with projected net profits of 1.55 billion, 1.65 billion, and 1.76 billion yuan for 2025-2027, representing growth rates of 122%, 6%, and 7% respectively [3] - The estimated reasonable valuation of the company is between 12.9 and 14.6 HKD, indicating a premium of 25%-42% over the current stock price [3]

Core Viewpoint - Zhou Liufu Jewelry Co., Ltd. is set to launch its IPO on June 26, 2023, on the Hong Kong Stock Exchange, aiming to raise funds for expanding its sales network and enhancing brand recognition [3][4]. Company Overview - Zhou Liufu was founded in 2004 by brothers Li Weizhu and Li Weipeng, focusing on the research, design, production, and sales of various jewelry products including gold, platinum, diamonds, and jade [4]. - The company has maintained a position among the top five jewelry brands in China from 2017 to 2024 based on the number of stores [4]. - Zhou Liufu ranks second among national jewelry companies in China for the compound annual growth rate (CAGR) of online sales revenue from 2022 to 2024, and first in terms of online sales revenue as a percentage of total revenue for 2024 [4]. Sales Network - As of December 31, 2024, Zhou Liufu operates 4,125 stores across 31 provinces and 305 cities in China, with 91 self-operated stores and 4,034 franchise stores [4]. - The distribution of stores includes 8.3% in first-tier cities, 35.6% in second-tier cities, and 56% in third-tier and lower-tier cities, with over 50% of stores located in shopping centers and department stores [4]. Online Presence - Zhou Liufu has established a strong online presence, achieving significant sales growth on major e-commerce platforms, with a CAGR of 46.1% in online sales revenue from 2022 to 2024, and online sales accounting for 40% of total revenue in 2024 [5]. - The company received the annual best-selling product award from JD Retail's gold jewelry division in 2023 [5]. Financial Performance - Zhou Liufu's revenue figures for 2022, 2023, and 2024 are 3.102 billion RMB, 5.150 billion RMB, and 5.718 billion RMB, respectively, with a CAGR of 35.8%, ranking first among national jewelry companies [5][6]. - The net profit for the same years is reported as 575 million RMB, 660 million RMB, and 706 million RMB, with a CAGR of 10.8% [6].

Group 1 - Hong Kong gold stocks experienced a decline, with Lingbao Gold (03330.HK) dropping by 9.5% [1] - Tongguan Gold (00340.HK) fell by over 6% [1] - Zhu Feng Gold (01815.HK) decreased by more than 5% [1] Group 2 - Other companies such as Chifeng Jilong Gold Mining (06693.HK), China Gold International (02099.HK), and Zhaojin Mining Industry (01818.HK) all saw declines of over 4% [1]

Investment Rating - The report assigns an "Outperform" rating for the company, with a target valuation range of HKD 12.90 to HKD 14.60, indicating a potential premium of 25% to 42% over the current stock price of HKD 10.30 [5][3]. Core Insights - The company is a leading gold mining enterprise in Henan Province, with a production scale of 7,000 tons of ore per day and an expected gold output of 5.2 tons in 2024, accounting for 1.37% of domestic gold production [1][14]. - The company has five major mining bases and a smelting processing plant, with a total gold reserve of approximately 131.81 tons (about 4.1 million ounces) as of the end of 2024 [1][46]. - The gold price is expected to remain strong due to a weakening dollar, increased central bank gold purchases, and geopolitical tensions affecting market sentiment [1][35][31]. Summary by Sections Company Overview - The company has established itself as a leading gold mining and smelting enterprise in Henan, with a focus on gold and its associated elements [14][23]. - It operates five mining bases and one smelting plant, with a daily ore processing capacity of 7,000 tons and a smelting capacity of 30 tons of gold annually [14][43]. Financial Performance - The company achieved a revenue of HKD 11.87 billion in 2024, a year-on-year increase of 12.7%, with a net profit of HKD 698 million, reflecting a significant growth of 119.4% compared to 2023 [4][23]. - The net profit margin is projected to be 43.1% in 2024, up from 29.8% in 2023, driven by rising gold prices and operational improvements [2][4]. Mining and Resource Quality - The average gold resource grade is 5.56 grams per ton, which is higher than the global average of 5.3 grams per ton for the largest gold mines [2][46]. - The company plans to focus on exploration and expanding mining capacity, with an expected annual production growth rate of over 10% for the next five years [2][3]. Market Dynamics - Central banks have significantly increased their gold purchases, with global central bank gold buying exceeding 1,000 tons for three consecutive years, indicating strong demand for gold as a strategic asset [35][37]. - The geopolitical landscape, including the ongoing Russia-Ukraine conflict and tensions in the Middle East, is likely to continue influencing gold prices positively [38][41].

Investment Rating - Industry rating: Recommended [4] Core Viewpoints - The geopolitical tensions and the decline of the US dollar index have led to a strong performance in gold prices, with COMEX gold rising 3.65% to $3,452.60 per ounce this week [23][25] - The market is increasingly pricing in the possibility of interest rate cuts by the Federal Reserve, with expectations of two cuts this year, the first likely in September [3][43] - The uncertainty in the Middle East, particularly regarding Iran and Israel, is contributing to a shift towards safe-haven assets like gold and silver [5][17] Summary by Sections Precious Metals - COMEX silver increased by 0.66% to $36.37 per ounce, while SHFE gold rose 1.42% to ¥794.36 per gram [23][25] - SPDR gold ETF holdings increased by 201,954.41 troy ounces, while SLV silver ETF holdings decreased by 1,090,806.40 ounces [25] - The gold-silver ratio rose by 2.97% to 94.93 this week [25] Base Metals - In the LME market, copper fell 0.24% to $9,647.50 per ton, while aluminum rose 2.10% to $2,503.00 per ton [49] - SHFE copper decreased by 1.17% to ¥78,010.00 per ton, and aluminum increased by 1.84% to ¥20,440.00 per ton [49] - The supply of copper is expected to tighten due to maintenance plans at domestic smelters and the ongoing geopolitical situation [7][8] Copper - The supply side is affected by a downward adjustment in the annual production forecast for the Kamoa-Kakula project and ongoing maintenance at the Cobre copper mine [7][44] - Domestic copper rod enterprises' weekly operating rate rose to 73.21%, but actual purchases are subdued due to high prices [7] - SHFE copper inventory decreased by 5.08% to 101,900 tons, while LME inventory fell by 13.54% to 114,500 tons [74] Aluminum - The aluminum industry operates at over 95% capacity, with minor maintenance plans causing limited supply disruptions [9][78] - Demand for aluminum products has softened, with a decrease in operating rates for various aluminum products [9][78] - SHFE aluminum inventory decreased by 6.91% to 110,000 tons, while LME inventory fell by 2.92% to 353,200 tons [11][78] Zinc - Zinc prices are under pressure due to weak demand, with domestic zinc ore processing fees rising [79] - SHFE zinc inventory decreased by 3.29% to 45,466 tons, while LME inventory fell by 4.36% to 131,000 tons [79]

Core Viewpoint - The Hong Kong gold stocks continue to rise, with notable increases in share prices for several companies following geopolitical tensions in the Middle East [1] Company Performance - Chifeng Jilong Gold Mining (06693.HK) increased by 6.75% - Shandong Gold Mining (01787.HK) rose by 4.19% - Lingbao Gold Company (03330.HK) saw a rise of 3.87% - Zhaojin Mining Industry (01818.HK) increased by 3.84% [1] Market Reaction - The recent attack by Israel on Iran has led to a bullish sentiment in the gold market, with COMEX gold prices strengthening to around $3440 [1]

Group 1 - The Hong Kong precious metals stocks showed initial recovery, with Tongguan Gold (00340.HK) rising over 4% [1] - Chifeng Jilong Gold Mining (06693.HK) and Lingbao Gold (03330.HK) both increased by 2% [1] - Zhaojin Mining (01818.HK), Shandong Gold (01787.HK), and Zijin Mining (02899.HK) all saw a rise of 1.5% [1]

Group 1 - Gold prices have recently seen an increase, with spot gold breaking through $3360.00 per ounce, currently reported at $3359.78 per ounce, up 0.14% for the day. COMEX gold futures are reported at $3380.30 per ounce, up 1.09% for the day [1] - The European Central Bank's annual report indicates that the dollar's share in global foreign exchange reserves is 46% for 2024, showing a slight decline from the previous year. In contrast, gold's share in foreign exchange reserves has risen to 20%, surpassing the euro to become the second-largest reserve asset globally [1] - China's foreign exchange reserves reached $32853 billion by the end of May, increasing by $36 billion, or 0.11%, from the end of April. Gold reserves increased by 60,000 ounces, marking the central bank's continuous seven-month accumulation [2] Group 2 - The report from AT Global Markets highlights that uncertainty in the market is driven by U.S. President Donald Trump's announcement of unilateral tariff rates, which has put pressure on the dollar [1] - The chief economist at Zheshang Securities anticipates further upward potential for gold prices, emphasizing the positive impact of central bank gold purchases on gold prices in the medium to long term [2] - Several Hong Kong-listed companies related to gold and precious metals include Zijin Mining (02899), Shandong Gold (01787), and China Gold International (02099), among others [3]