Shareholders' net profit increased by 1.5 times, is the gold bull stock ZHAOJIN MINING (01818) expected to have potential in 2025?

Setting a record best performance in history, ZHAOJIN MINING (01818), a bull stock in the gold sector, with shareholders' net profit doubling, is flexing its muscles in the market as its market value soars 1.8 times by 2025. It is reported that on March 22nd, ZHAOJIN MINING (01818) released its performance for 2025, achieving a revenue of 18.056 billion yuan, a year-on-year increase of 56.32%, a gross profit of 7.57 billion yuan, a year-on-year increase of 67.4%, and a net profit attributable to shareholders of 3.614 billion yuan, a year-on-year increase of 149.1%, with a gross profit margin and net profit margin of 41.9% and 20% respectively. In 2025, the company had a basic earnings per share of 0.96 yuan, a year-on-year increase of 173.56%, with a proposed cash dividend distribution of 0.1 yuan per share. In 2025, with gold standing out, on one hand, the increasing uncertainty in the global economy, including escalated geopolitical risks and tariff frictions, triggers safe-haven investments in precious metals, while on the other hand, the continuous gold purchases by global central banks and other factors intertwine to drive up the gold prices, with London gold and New York gold both seeing a rise of 64%. Seizing the opportunity, ZHAOJIN MINING increased production and efficiency on the supply side, while on the demand side, under the support of major clients, continued to release revenue and profit growth. Benefiting from the rise in gold prices and performance growth expectations, ZHAOJIN MINING's market value continued to strengthen, with an increase of over 180% in 2025, and a continuous rise for four consecutive years from 2022 to 2025, with an increase of up to 372.3%. With the escalation of global economic instability due to the US-Iran conflict in 2026, gold still holds an upward expectation. Will the company continue to perform well? Sustainable high growth in performance, significant improvement in profitability It is evident that in 2025, all performance indicators of ZHAOJIN MINING have shown comprehensive growth, primarily due to the "rise in quality and quantity" in the gold mining business. The company produced a total of 27,225.68 kilograms of gold in 2025, with mineral gold accounting for 19,791.85 kilograms, both maintaining stable growth, while the gold price saw an increase of over 60%, driving a 47.14% growth in the gold mining business, which accounted for over 87% of the total revenue. With the increase in scale, the company's profitability has significantly improved. In 2025, the gross profit margin was 41.93%, an increase of 2.78 percentage points year-on-year. Under operational leverage, various expenses have been noticeably optimized, including a period expense ratio of 12.23%, a decrease of 5.67 percentage points year-on-year, with the core administrative expense ratio decreasing by 3.66 percentage points to 9.1%, and the financial expense ratio decreasing by 1.94 percentage points to 2.78%. In fact, in recent years, the gold price has been on an upward trend, which has driven the continuous high growth in performance for the company's gold mining business. From 2023 to 2025, the company's revenue increased from 8.424 billion yuan to 18.056 billion yuan, with a compound growth rate of 46.4%. Both the gross profit margin and various expense ratios have been optimizing trends, resulting in the shareholders' net profit increasing from 686 million yuan to 3.614 billion yuan, a compound growth rate of 129.5%, and the shareholders' net profit margin increasing from 8.14% to 20.02%, an increase of 11.88 percentage points. Two variables in the ZHAOJIN MINING 2025 financial report are noteworthy. One is other income and gains of 2.276 billion yuan, a significant increase of 291%, mainly due to a fair value change income of 1.455 billion yuan, a year-on-year increase of 26.5 times, which may be mainly caused by the change in market value of the listed stocks held by the company; the other is other expenses of 2.022 billion yuan, a year-on-year increase of 152.88%, which offset some of the other income but was mainly affected by asset impairment (impairment ratio of 78.8%), in fact, there was no actual expenditure, and if not considering this impairment, the shareholders' net profit would be as high as 5.2 billion yuan. In addition, in 2025, the company actively managed its liabilities, redeeming and paying off interest-bearing debts, reducing liquid corporate bonds by 999 million yuan, and reducing interest-bearing bank debts by 1.298 billion yuan, for a total reduction of 2.297 billion yuan. With continued high growth in performance and a reasonable planning of equity leverage, ZHAOJIN MINING's shareholders' return on equity (ROE) continues to rise, reaching 12.42% in 2025, an increase of 9.34 percentage points compared to 2023. Two driving factors, valuation expected to further rise In 2026, ZHAOJIN MINING still has high growth expectations in performance, with two main driving factors: first, the "expansion and speed increase" in quantity and price; and second, the "domestic + overseas" dual-driver performance growth. Based in Shandong, ZHAOJIN MINING has the largest number of super-large and large-scale gold mining sites in the province, with a large gold reserve. In recent years, the company has been increasing exploration investment to assist in rapidly expanding the scale of resource reserves and optimizing its domestic and overseas layouts. Starting from the western region for domestic acquisitions and establishing three major bases overseas, it has gradually formed a nationwide resource layout. In 2025, the company's expansion and capacity improvement efforts were significant, including the efficient underground TBM excavation by Ruihai Mining, successful water testing of the beneficiation plant, obtaining a production license for the Jintingling Mining, and transitioning from the construction phase to the production phase. According to the JORC report, in 2025, the company added 71.33 tons of gold resources through exploration, with a total gold resource of 1504.68 tons and mineable reserves of 521.24 tons, ranking second only to Zijin and Shandong Gold Mining in China. It is worth mentioning that the company's largest single gold mine domestically, the sea gold mine project, is steadily increasing production capacity, bringing a key variable for capacity enhancement. In 2025, the company achieved a new breakthrough in deep-sea exploration using hardcore technology, successfully locating hidden ore bodies in the shallow areas of the sea floor up to 3,000 meters deep. Compared to land-based exploration and mining, operating under complex marine conditions will present greater challenges, providing the company with a differentiated advantage and injecting strong driving force into the high-quality development of ZHAOJIN MINING through the "land + sea" dual strategy. In 2026, the "expansion and speed increase" in quantity and price have a high degree of certainty, with the company's production capacity continuing to expand, while the long-term rising price expectations for gold due to geopolitical conflicts, inflation, and central bank gold purchases, coupled with long-term cooperation with the company's five major clients, provide assurance for demand. The overseas market has opened up growth opportunities for ZHAOJIN MINING. Since 2018, the company's "Double H" strategy has gradually taken shape, with the acquisition of Ecuador's Jinwang Mining, Australia's Iron Extension Mining, and West Gold Mining, obtaining control of the Abuja Gold Mine Project in West Africa and the Komahun Gold Mine in Sierra Leone, establishing a pattern of growth based on domestic core support and multiple overseas breakthroughs. In 2025, the company's domestic and overseas market revenues were 15.571 billion yuan and 2.484 billion yuan, respectively, with year-on-year increases of 53.2% and 78.83%, accounting for 86.24% and 13.76% of the total income, respectively. ZHAOJIN MINING's overseas market revenue growth is eye-catching, and its overseas gold mining production capacity is steadily increasing, with the potential to further increase market share in 2026. The company disclosed in the financial report that it will continue to deepen its global layout, expand reserve space through external mergers and acquisitions, accelerate the merger and integration process around domestic and foreign key mineral belts and high-quality, potential mining rights projects, accurately select high-quality targets, control investment risks, and continuously increase its gold resource reserve. The company has also received positive outlooks from major investment banks. For example, a report by Macquarie stated that ZHAOJIN MINING continues to expand its gold mine portfolio through exploration for organic growth. It predicts that the net profit forecast for 2025-2027 will be increased by 10%, 74%, and 50%, reaching 3.617 billion, 4.991 billion, and 4.293 billion yuan, respectively, which is in line with expectations for 2025. The bank has set a target price of 42 Hong Kong dollars, representing a premium of over 60% compared to the current price. In summary, ZHAOJIN MINING's outstanding performance, whether looking at the 2025 performance alone or the performance of the past three years, has maintained a high growth level, with profitability continuously improving and consistently leading in the industry. This is also the core logic behind the sustained surge in the company's valuation. With the expectation of the "expansion and speed increase" in quantity and price and the dual drive of the domestic and overseas markets in 2026, the high growth performance continues with certainty, combined with the positive outlook from investment banks and institutions, the valuation is expected to further rise.