On the evening of July 31, Chifeng Gold (600988.SH) released its H1 2026 earnings forecast, expecting net profit attributable to shareholders of RMB 2.1 billion to 2.3 billion for the first half, up approximately 80% to 90% year-on-year, significantly exceeding market expectations. This result not only reaffirms the earnings explosiveness of gold miners during the high-prosperity cycle but also provides new evidence for the valuation reset of Asia's precious metals mining sector.
Volume and Price Increases Drive Strong Earnings Growth
In the announcement, Chifeng Gold attributed the earnings growth to three core factors: first, international gold prices remained at high levels, significantly raising the company's average selling price year-on-year; second, the No. 2 tailings pond project at the Sepon mine in Laos reached full production, driving double-digit growth in gold output compared to the same period last year; third, the company continued to implement cost-saving and efficiency-enhancing strategies of 'replacing labor with mechanization and reducing personnel through automation,' cutting per-gram gold costs by more than 12% year-on-year.
According to the company's disclosure, gold production in the first half is estimated at about 8.5 tons, with Laos mine contributing over 40% of total output for the first time, marking that the company's overseas strategy has entered a harvest period. Meanwhile, the five domestic mining districts optimized their mining and beneficiation processes, effectively offsetting the adverse impact of declining ore grades and further solidifying the production base.
Cost Control and Resource Upgrades Build Counter-Cyclical Capability
In the precious metals industry, cost control is a key variable determining miners' profit flexibility. In recent years, Chifeng Gold has focused on advancing digital mine construction, continuously reducing per-ton ore processing costs through smart ore dressing systems and driverless mining trucks. In 2025, the company's all-in sustaining cost (AISC) entered the top 25% of global gold mining, and its cost advantage further expanded in the first half of 2026.
On resource reserves, the Sepon mine in Laos continued to increase copper-gold resources, adding approximately 60 tons of gold resources; domestic mines such as Wulong in Liaoning and Hanfeng in Jilin also made major breakthroughs in deep exploration. During a recent survey, management stated that the company plans to raise gold resources to more than 650 tons and annual output to the level of 20 tons within three years.
Asian Gold Miners Usher in a Window of Valuation Re-rating
Chifeng Gold's earnings forecast is a microcosm of the broader upturn in Asia's gold mining sector. Under a macro environment featuring expectations of Fed policy shifts, continued central bank gold purchases, and geopolitical uncertainties, international gold prices have repeatedly hit record highs since the second half of 2025. According to the World Gold Council, global gold demand grew 12% year-on-year in Q1 2026, with central bank purchases exceeding 200 tons for the seventh consecutive quarter.
In contrast, shares of major Asian gold miners have lagged, with P/E ratios generally lower than North American peers. Taking Chifeng Gold as an example, even after the earnings forecast announcement, its forward P/E remains below 15 times, while the global average valuation center for gold miners has exceeded 20 times. This valuation trough is attracting increasing attention from long-term funds.
Institutional Views and Future Outlook
Several brokerages have raised their target prices for Chifeng Gold in recent research reports. CITIC Securities noted that the Sepon mine has huge copper-gold resource potential, and associated copper production could contribute additional profit flexibility; Guotai Junan International believes Chifeng Gold has a clear output growth path and industry-leading cost control, making it a scarce high-growth gold stock on the A-share market.
However, some analysts caution that precious metals price volatility is the biggest risk variable for mining stocks. If recession expectations intensify in the second half, weakening industrial demand, or if the Fed delivers unexpectedly hawkish signals, gold prices could see periodic corrections. Additionally, political risks and exchange-rate risks at overseas mines cannot be ignored.
- Risk 1: Unexpected decline in international gold prices
- Risk 2: Production and operating uncertainties at the Laos mine
- Risk 3: Impact of RMB exchange rate fluctuations
From a long-term industry perspective, global gold mining is entering a new capital expenditure cycle, with intensifying competition for high-quality resource acquisitions. Thanks to resource endowments and cost advantages, Asian miners are expected to further increase their global market share in this cycle. Chifeng Gold's earnings delivery may become one of the catalysts to ignite the Asian gold mining sector.
(This article is based on analysis of public information and does not constitute investment advice. Markets are risky; invest with caution.)
