Western Region Gold (SH:601069) 2 1 Shi Ji Jing Ji Bao Dao·2025-09-03 16:06Core Viewpoint - After a four-month high-level consolidation, international gold prices are beginning to prepare for a new round of increases, with Comex gold futures breaking through $3,630 per ounce and spot gold reaching a high of $3,565 per ounce, both surpassing the historical highs from late April this year [2]. Group 1: Market Performance - The gold sector in the A-share market has seen a significant rise, with the Shenwan gold sector achieving an average increase of 11.35% since September, while Western Gold has experienced a "three consecutive boards" trend, outperforming other gold stocks [5]. - The performance disparity among gold companies may be attributed to Western Gold's better earnings elasticity, with revenue and profit growth of 69% and 132% year-on-year, respectively, ranking second and third among ten companies in the Shenwan gold sector [5]. - Companies like Zhaojin Gold, Xiaocheng Technology, and Shandong Gold are expected to maintain good earnings elasticity for the entire year, considering historical bases, semi-annual growth rates, and sell-side profit expectations [5]. Group 2: Profitability Analysis - The profitability of mining companies is highly correlated with gold price trends, with Shanjin International's gross profit margin for gold products increasing by 7.2 percentage points to 79% in the first half of the year [7]. - In contrast, refining-focused gold companies face rising raw material costs, leading to a decrease in profit margins, as seen with Hunan Gold, where the gross profit margin fell by 1.4 percentage points to 2.43% [7]. - The recent rise in gold prices is expected to enhance the profitability elasticity of upstream mining companies compared to refining companies [7]. Group 3: Fund Holdings and Investment Trends - Fund holdings in the Shenwan gold sector have fluctuated significantly, with total holdings increasing from 1.787 billion shares to 2.261 billion shares before a rapid decline to 1.658 billion shares by the end of 2024 [13]. - Following the recent surge in gold prices, funds have resumed increasing their holdings in gold stocks, with total holdings rising to 2.089 billion shares by mid-year, just below the peak in the past three years [15]. - The investment logic of professional institutions emphasizes earnings elasticity, leading to increased holdings in gold stocks with strong semi-annual growth rates, such as Western Gold [16]. Group 4: Future Outlook - The consensus profit expectation for Western Gold is 450 million yuan, corresponding to a year-on-year profit growth of approximately 54% [10]. - Institutions have also provided favorable annual profit growth expectations for refining companies like Hunan Gold and Hengbang Shares, considering potential profit margin recovery [10]. - As international gold prices have surpassed previous highs, any unexpected increases may lead to adjustments in the profit expectations set by institutions [10].