Zhaojin Mining has reported 9M26 revenue of RMB13.093bn (+8.6% YoY) and an attributable NP of RMB1.970bn (-7.0% YoY). For 3Q26, revenue was RMB4.071bn (-19.8% YoY, -13.0% QoQ), while the attributable NP was RMB391mn (-42.2% YoY, +0.7% QoQ). Higher gold prices YoY provided support, but their sequential decline, together with remediation-related shutdowns at some domestic mines, weighed on the gross margin. With gold prices remaining well supported over the medium to long term and operations likely to improve as mines resume production, maintain BUY.
Gold prices support earnings; mine halts drag 3Q26 margin
On profitability, the gross margin was 38.74% for 9M26 (+0.16pp YoY), mainly supported by higher gold prices YoY. For 3Q26, the gross margin was 17.82% (-13.68pp YoY, -30.77pp QoQ). The average COMEX gold price was USD4,261.21/oz for 3Q26 (+23.01% YoY, -5.56% QoQ), while the average SHFE gold price was RMB926.47/g (+16.53% YoY, -6.45% QoQ). Beyond the sequential decline in gold prices, we attribute the QoQ gross margin contraction mainly to remediation-related shutdowns at some domestic mines, which weighed on production and sales volumes and pushed costs higher. On expenses, the operating expense ratio was 13.19% for 9M26 (+1.89pp YoY), mainly reflecting a 2.00pp YoY increase in the administrative expense ratio. The effective income tax rate also rose by 6.69pp YoY, further weighing on the attributable NP.
Earnings forecasts and valuation
Reflecting lower production and higher gold production costs per gram due to remediation at some mines, we revise our 2026/2027/2028 attributable NP forecasts to RMB3.134bn/8.220bn/9.198bn (-27.52%/0.00%/-0.64% vs our previous forecasts), with EPS of RMB0.88/2.32/2.60. We roll our valuation forward to 2027. Peers trade at 11.11x 2027E PE on iFinD consensus. We assign Zhaojin 14x 2027E PE, reflecting its strong growth prospects and the substantial 10–15 tonnes of incremental mined gold output that Haiyu could contribute at full capacity. Using the 20 October 2026 exchange rate of RMB0.86 per HKD1, we maintain our target price of HKD37.77 and maintain BUY.
Risks: weaker-than-expected precious metals demand, slower-than-expected production increases from mining developments.