Golden stock valuation awakening, where are the black horses of Hong Kong stocks entering the "golden age" of growth?

Thanks to investors weighing the escalating political tensions of the GEO Group Inc and the prospect of further interest rate cuts in the United States, on Tuesday this week, the price of gold once again hit a historic high, breaking through $4,490 per ounce, marking the 50th trading day this year that the price of gold has set a new record. While the market is still debating whether this round of gold price increases has peaked, a set of historical data has outlined a larger picture - the rise of gold is not a short-term pulse, but a long-cycle narrative under the reconstruction of the global credit system. As the price of gold continues to reach new highs, gold stocks are also undergoing a restructuring of valuation logic. In the Hong Kong stock market, a group of growth-oriented mining companies holding resource increments are waiting for the market's awakening. The hidden ceiling of the gold price Looking back at the long-term rise in gold prices, it is enough to break the current understanding that the gold price has peaked. In the 1970s and 1980s, the collapse of the Bretton Woods system ignited a gold bull market, with the price of gold soaring from $35 per ounce to $850, an increase of 18 times. From 2000 to 2011, with loose global liquidity intertwined with economic risks, the price of gold rose from $250 to $1921, an increase of 5.5 times. From 2019 to the present, the price of gold has risen from around $1500 to $4490, an increase of less than 2 times - compared to the previous two gold bull markets, the current increase is only the prelude. If calculated according to the anchoring logic of currency credit, the potential space of the gold price is more impactful. Some institutions estimate that based on the calculation of $38 trillion in US debt and 22,000 tons of gold, the reasonable price of gold should reach $5400 per ounce; if calculated based on the growth rate of annual additional $2 trillion in US debt and 3,600 tons of gold supply, the long-term reasonable gold price could even reach $17,000 per ounce. Gold, as the core value of non-credit assets, differs from currencies like the US dollar and the Euro, as it does not rely on any country's sovereign credit endorsement. In the face of risks such as currency devaluation, high inflation, and geopolitical conflicts, gold becomes the core choice for fund hedging. The assessment of the value of non-credit assets such as gold has just begun. As credit risks are repeatedly exposed and awareness of asset allocation increases, the public will gradually turn idle gold jewelry into cash or hold gold bars as a safety cushion for household assets. Idle gold will gradually shift from decorative and unused items to asset allocation tools and will gradually become activated. But this process will continue to amplify the public's demand for gold. Therefore, even though the rise in the price of gold is not immediate - there have been volatile trends with weekly declines of over 5% in April to August 2025, this is more like a healthy adjustment in a long bull market. With central banks globally net buyers of gold for four consecutive years, and the marginal weakening of the US dollar credit becoming commonplace, the upward shift of the gold price will be an irreversible trend, and $4500 is by no means the end point. Cognitive gap of gold stocks Current market investments are still using the logic of cyclical goods to price gold as a quasi-reserve asset. For a long time, investors have tended to view gold stocks as ordinary cyclical goods, believing that a rise in gold prices will increase supply and thereby suppress prices. However, the special nature of gold lies in the fact that it is not an industrial commodity, and a rise in price does not lead to a reverse feedback in supply. Instead, it reinforces its value storage properties, which is why the valuation of domestic gold stocks is higher than other cyclical goods. Now, this old cyclical thinking is being broken first in overseas markets: since 2025, the PE valuations of overseas gold stocks have also risen to over 30 times, matching the rise in gold prices. The domestic market, however, remains more restrained, as investors have not fully accepted that high gold prices are the new normal, resulting in a lagging overall increase in gold stocks compared to the price of gold. Usually, when stock prices rise, the PE also increases, but in 2025, there was a counterintuitive phenomenon of "rising stock prices, falling PE" because the profit growth of most top gold stocks exceeded the average stock price increase, compressing the dynamic PE ratios of most top gold stocks to the range of 15-25 times. By the close of trading on Tuesday, the leading Zijin Mining Group (02899) in the Hong Kong stock market had a dynamic PE ratio of 16.8 times. The market has given it a relatively lower valuation because of its large market cap, but compared to overseas leader Barrick Gold Corporation (GOLD.US), Zijin Mining Group has better growth prospects. With a resource giant like this, whose annual output growth rate can exceed 10%, it can already be considered an elephant in the room. Currently, the relatively restrained valuation situation in the domestic market is quietly changing. If the market begins to believe in 2026 that high gold prices can continue, gold stocks will complete the transition from hesitancy to follow-up growth, and then to proactive allocation. In terms of profit elasticity, the potential of gold stocks has not yet been fully realized. For example, with the cost base of top companies, the total cost of most gold mining companies is in the range of $1000-1500 per ounce, and the gross profit margin under the current gold price has already exceeded $2800 per ounce; if the gold price continues to rise to $5000, the gross profit will increase by another $700 per ounce, corresponding to a net profit growth rate far exceeding the rise in gold prices. This combination of operating leverage and valuation repair is the core logic of the next stage of gold stocks. Growth black horses in Hong Kong gold stocks In the Hong Kong stock market, a group of growth-oriented gold mining companies with clear resource increments and capacity release are becoming potential targets for "valuation repair." Compared to many resource leaders in A-shares, Hong Kong gold stocks have more small and beautiful growth attributes, with their core competence lying in the surge in resource volume and the explosive growth in capacity. This is currently the most scarce in the market. From a financial and resource perspective, Hong Kong gold targets can be divided into two categories: One type is stable, such as LINGBAO GOLD (03330). Its institutional forecast for gold production from 2025 to 2027 is 6.5/8/8.8 tons, with profits of 6.7 billion yuan in H1 2025 and profit expectations of 15/27/30 billion yuan from 2025 to 2027, corresponding to a market value of 24.4 billion Hong Kong dollars (as of the close of this week on Tuesday) with PEs of 16/9/8 times. The advantage of such targets lies in stable production and sufficient cash flow but relatively limited growth flexibility. The other type is the growth black horse, represented by WAN GUO GOLD GROUP (03939). Its gold production plan from 2025 to 2028 gradually increases from 3.5 tons to 15 tons, with profits of 6 billion yuan in H1 2025 and institutional profit expectations of 14/27/40/66 billion yuan from 2025 to 2028, corresponding to a market value of 37.3 billion Hong Kong dollars, with PEs of approximately 24/12/8/5 times. The core attraction of Wan Guo Gold lies in the double explosion of resources and capacity: the resource volume of its core asset, Jinling Gold Mine, has skyrocketed from 228 tons to 367 tons, a 61% increase; and with the empowerment of strategic shareholder Zijin Mining Group, the expansion plan for the Jinling Gold Mine, with an annual ore selection capacity of 13.5 million tons, has been finalized. After production, annual production will increase from 2.06 tons to 15 tons, an increase of more than 6 times. This combination of resource increments and capacity elasticity is not common among Hong Kong gold stocks. With market expectations of 66 billion yuan in profit in 2028, the PE ratio corresponding to the current market value is only 5 times, and the growth potential is clearly visible. Valuation awakening lies in cognitive mismatch Looking at the long history of gold, the core logic of each bull market has been the restructuring of the global credit system; and in each round of restructuring, the valuation repair of gold stocks has lagged behind gold prices but ultimately surpassed them. In the process of the gold bull market, every instance of gold stocks performing differently from commodity prices may be a window for positioning. The market is shifting from old cyclical thinking to new value thinking. When the market finally accepts that high gold prices are the new normal, the cognitive mismatch will bring about a complete outbreak of gold stocks from hesitation to explosion. Investors who have positioned themselves early with growth targets may be the first to taste the dividends of valuation repair. And the next generation of gold stock leaders will not just be based on market cap rankings but will be those companies that have quietly practiced internal strength during industry fluctuations: holding enough resource reserves, with a clear path for capacity release, and able to realize profit elasticity in a high gold price cycle.