Summary of Key Points from the Conference Call Industry Overview - The discussion revolves around the **gold and precious metals industry**, particularly the comparison between gold and interest-bearing assets like the S&P 500 over a long-term horizon [1][5][6]. Core Insights and Arguments - **Long-term Performance**: Gold and the S&P 500 have achieved similar annualized compound growth rates of approximately **7.2%** over the past **65 years**, challenging traditional views on non-yielding assets [1][5]. - **Market Cycles**: Historical analysis indicates that the market has experienced two major cycles over the past **65 years**, each lasting about **30-40 years**, where initially interest-bearing assets perform well, followed by a period where value-preserving assets like gold gain strength [1][7]. - **Current Market Position**: The market is at a critical juncture where the returns of gold and the S&P 500 are converging. The outcome in the next **one to two years** will depend on whether the AI industry can sustain the S&P 500 or if economic stagnation will lead to a rise in gold prices [1][8]. - **Extreme Scenarios for Gold Prices**: In extreme scenarios, gold prices could reach **$10,000** in a situation similar to the **1980s stagflation**, or **$4,154** during a recession akin to **2011**, indicating significant potential for price increases under adverse economic conditions [1][9][10]. - **Asset Allocation Strategies**: During economic recessions, it is advised to avoid risk assets and hold cash and gold. However, in stagflation periods, cash may depreciate, making physical assets like gold more advantageous [1][11]. Additional Important Insights - **Copper-Gold Ratio**: The copper-gold ratio has reached a historical low, similar to the **1980s stagflation**, indicating weak expectations for the manufacturing and industrial sectors, which reflects a broader slowdown in global economic momentum [2][13]. - **Future of Gold as a Value Asset**: The current economic environment suggests that the bull market for gold may not be over, with potential risks of the U.S. economy declining further, transitioning from a soft landing to a more severe downturn [1][14]. - **Investment Recommendations**: In the current low-interest-rate environment, a cautious approach to gold stocks is advised, but the potential for significant returns exists due to low valuation levels. Specific stocks such as **Shandong Gold, Chifeng Gold**, and others are recommended for investment [1][15][16]. This summary encapsulates the key points discussed in the conference call, providing insights into the gold market's dynamics, investment strategies, and economic indicators.

Investment Rating - The report maintains a "Buy" rating for the company [4][6]. Core Views - The company reported a 3.9% year-on-year decline in revenue for the first half of 2025, totaling 17.336 billion yuan, while net profit attributable to shareholders increased by 3.8% to 2.164 billion yuan [1]. - The financial and consulting business remains a key revenue driver, with a revenue increase of 2.1% year-on-year, while equipment and industrial operations saw declines of 10.7% and 15.5%, respectively [1][17]. - The company has focused on the development of inclusive finance, achieving a 28.7% growth in the asset scale of this business, with revenue soaring by 124.1% year-on-year [3][38]. Summary by Sections Financial Performance - In the first half of 2025, the average return on equity was 8.66%, an increase of 0.17 percentage points year-on-year [1]. - The company’s interest-earning assets stood at 266.626 billion yuan, reflecting a 2.3% increase from the end of the previous year [2]. - The average yield on interest-earning assets rose to 8.08%, while the cost of interest-bearing liabilities decreased to 4.02%, leading to a net interest margin of 4.51% [2][25]. Business Segments - The financial and consulting segment generated 110.90 billion yuan in revenue, accounting for 64.0% of total revenue, with a gross margin of 57.5% [1][19]. - The inclusive finance business achieved a revenue of 14.51 billion yuan, significantly contributing to overall growth [3][38]. Asset Quality - The company reported a non-performing loan ratio of 1.05% and a watchlist ratio of 5.51%, both showing a decline from the previous year [3][36]. - The provision coverage ratio remained stable at 227.33%, indicating solid asset quality [3]. Future Outlook - The company is expected to maintain a high cash dividend payout ratio, with projections for net profit attributable to shareholders of 4.01 billion yuan, 4.23 billion yuan, and 4.48 billion yuan for 2025, 2026, and 2027, respectively [4][5].

Core Insights - The current gold bull market has lasted for 33 months, with increasing divergence in market views regarding its cycle position and potential [3][18] - The report provides a new perspective on the confrontation between gold and interest-bearing assets, suggesting that gold still has room to rise despite fears of high prices [3][10] - The second half of the year may see a higher probability of recession, which could further boost the gold bull market through cyclical safe-haven investments and de-dollarization trends [3][10] Half-Year Review: Three Phases of Change - As of June 30, 2025, gold prices increased by 26% to $3,302 per ounce, with a peak of $3,500 per ounce, divided into three phases: January-March saw a COMEX squeeze, April experienced a V-shaped reversal due to tariff escalations, and May-June saw geopolitical easing leading to price stabilization [8][21] - Notable differences this year include a shift in U.S. economic expectations, a significant increase in the negative correlation between gold prices and the U.S. dollar/stock market, and the sensitivity of gold stocks to price changes due to historically low valuations [8][29] Gold's Perspective: Store of Value vs. Interest-Bearing Assets - Gold's opposition is not only to the U.S. dollar but also to interest-bearing assets, with historical data showing that gold and interest-bearing assets have cyclical rotations rather than a one-sided advantage [9][37] - The report highlights that the annual compound returns of gold and the S&P 500 are nearly equal at approximately 7.2%, indicating that stable long-term returns are challenging to achieve [9][40] Historical Price Anchoring: Extreme Pricing Scenarios - The report explores potential extreme pricing scenarios for gold, suggesting that in a recessionary environment, gold could reach $4,196 per ounce, while in a stagflation scenario, it could reach $10,093 per ounce [10][60] - The analysis indicates that the current gold price could be 1.25 times higher in a recession scenario, reflecting a shift in investment from risk assets to gold as a safe haven [10][61] Semi-Annual Outlook: Focus on Recession Pathways and Gold Stock Elasticity - The report emphasizes the importance of understanding different historical pathways to gauge gold's current cycle position, with a focus on preparing for potential recession scenarios [10][59] - Gold stocks are expected to show greater elasticity due to their extreme undervaluation and potential performance recovery as market conditions evolve [10][35]