Core Viewpoint - The article discusses the divergence in market perception regarding Laopu Gold and its relationship with gold prices, emphasizing that Laopu Gold is a beta to gold prices and exploring the implications of this relationship for investors [3]. Group 1: Sales and Revenue - Laopu Gold's projected revenues for 2023, 2024, and the first half of 2025 are 31.80 billion, 85.06 billion, and 123.54 billion yuan respectively, showing year-on-year growth of +145.7%, +167.5%, and +251% [5]. - The gross profit margins for these periods are 42%, 41%, and 38%, with the decline attributed to rising raw material costs [5]. - Laopu Gold does not use hedging tools to mitigate gold price volatility but manages risks through monthly procurement plans and price adjustments [5]. Group 2: Business Model Comparison - Most gold jewelry retail companies rely on stable processing fees for sustainable profits rather than fluctuating gold prices [6]. - Laopu Gold's strategy is to maximize profit margins during gold price increases, positioning itself as a high-end brand with less sensitivity to raw material price changes [10]. Group 3: Store Expansion and Pricing Strategy - Laopu Gold plans to open 9 new stores and expand or renovate 8 stores in 2025, indicating a proactive approach to capitalize on the current gold price cycle [10]. - The company has implemented price increases 2-3 times annually, with a cumulative increase of approximately 20% in 2024 and over 40% in 2025 [12]. - The price adjustments have not kept pace with the rise in gold futures, suggesting a lag in price increases relative to market conditions [12]. Group 4: Consumer Behavior and Market Positioning - Laopu Gold is attracting customers from traditional brands like Chow Tai Fook and Chow Sang Sang, indicating a shift in consumer preferences towards its offerings [17]. - The brand's unique design philosophy and cultural narrative have contributed to its ability to capture high-net-worth consumers, despite a general trend of "downgrading" among luxury consumers [17][18]. - The company is focusing on expanding its VIC (Very Important Customer) user base to reduce price sensitivity among its clientele [21]. Group 5: Future Profitability and Market Challenges - Laopu Gold aims to maintain its gross margin despite the removal of gold price increases as a factor, focusing on enhancing its membership system and product offerings [21]. - The company has maintained a stable gross margin of 41-42% from 2021 to 2024, with specific products achieving higher margins [22]. - The challenge remains in persuading consumers to continue purchasing gold jewelry during price downturns, as gold pricing is linear and does not follow the same supply-demand narratives as other luxury goods [24].

Summary of Key Points from the Conference Call Industry Overview - The discussion revolves around the **gold mining industry** and its supply-demand dynamics, particularly focusing on long-term supply cycles and their impact on gold prices [1][2]. Core Insights and Arguments - The mining industry is entering a **10-15 year supply expansion cycle**, historically associated with significant price corrections, with gold prices potentially experiencing around a **50% retracement** during these periods [1][3]. - In the **2018-2020 gold bull market**, supply did not significantly increase as companies prioritized balance sheet repair over production expansion, leading to a relatively small price retracement when demand fell due to the pandemic [6]. - The current bull market, which began in **2018**, may transition into a new supply expansion phase around **2028**, potentially leading to the next bear market. However, technological and capital efficiencies have reached their limits, and geological constraints are becoming more significant, which may reduce marginal returns on investment [7][9]. - Historical data indicates that from **1900 to 1970**, global gold supply was closely linked to new mine discoveries, while post-1970, technological advancements and capital operations became the main drivers, although these methods are now reaching their limits [8][9]. Additional Important Points - Since **2016**, the number of new mine discoveries has sharply declined, with ore grades dropping to very low levels, creating a bottleneck in gold supply [2][13]. - The **gold market** faces different challenges at various stages; during bull markets, investors are particularly concerned about the extent of price corrections following significant price increases [4][5]. - The **2000-2012 merger and acquisition wave** in the gold industry significantly impacted operational efficiencies and production levels, with major companies expanding into less efficient regions [12]. - The **future outlook** for gold prices is cautiously optimistic, with expectations of zero or slightly negative growth in supply over the next three years, which may prevent significant price declines [14][15]. This summary encapsulates the key points discussed in the conference call, highlighting the intricate relationship between supply dynamics and gold prices, as well as the challenges and future outlook for the gold mining industry.

Group 1 - The Hong Kong stock market is experiencing a "slow bull" market, with the Hang Seng Index up 26.32% year-to-date as of August 22, 2025, entering a technical bull market [1] - New consumption, innovative pharmaceuticals, and hard technology sectors are leading the market, showcasing a revival of vitality and prosperity [1] - Zhaojin Mining has seen its stock price nearly double this year, with a year-to-date increase of close to 100%, making it a notable highlight in the resource sector [1] Group 2 - Zhaojin Mining reported a revenue of 6.973 billion yuan for the first half of 2025, a significant increase of 50.69% year-on-year, and a net profit attributable to shareholders of 1.44 billion yuan, soaring 160.44% year-on-year [1] - The core driver of Zhaojin Mining's strong performance is linked to the price of gold, which influences industry prosperity and the company's competitive edge [1][4] Group 3 - The supply of gold is facing challenges due to the scarcity of new gold mines and limitations in recycling, while demand is bolstered by its use in jewelry, technology, and as a safe-haven asset during economic instability [2] - Geopolitical tensions and central banks increasing their gold reserves are further driving demand for gold [2] Group 4 - The expectation of rising gold prices is supported by various financial institutions, with predictions of gold reaching $3,500 per ounce in the near term and potentially $4,000 per ounce by mid-2026 [3] - Zhaojin Mining's resource reserves, calculated at 1,446.16 tons of gold, provide a solid competitive advantage, with a significant increase in production [4] Group 5 - Zhaojin Mining's production of gold reached 288,000 ounces in the first half of 2025, a 21.83% increase from the same period in 2024, with total gold production rising to 459,400 ounces [4] - The company has completed 22 high-grade project acquisitions since 2023, significantly expanding its mining rights [4] Group 6 - The Haiyu gold mine, with a resource of 562.37 tons, is expected to be a key growth driver, potentially contributing 6.3 billion yuan in net profit if gold prices rise to 850 yuan per gram [5] - Zhaojin Mining has initiated a "gold resource doubling plan" with a dedicated fund to enhance resource expansion and production growth [5] Group 7 - The true value in the gold mining sector lies in the control of scarce resources rather than short-term price fluctuations, with Zhaojin Mining focusing on strategic expansion to redefine long-term value [6]