Shandong Gold Mining Co., Ltd. (600547.SS, 1787.HK) - Scaling Production and Enhancing Margins

Global Materials | Industrials | Commodities

Rahul Jain

Equity Bottom-Up

Shandong Gold Mining Co., Ltd / Equity Bottom-Up

Shandong Gold Mining Co., Ltd (600547 CH)

<ul>
<li>Earnings inflection is underway: Spot gold (&gt;USD 4,400/oz), rising self-mined output (60t in 2025E), and mix shift drive a step-change in EBITDA and cash flow from FY25 onward.</li>
<li>Valuation disconnect persists: Shandong Gold trades at ~3× EV/EBITDA—lowest in the China/HK gold peer set—despite leverage peaking in FY25 and de-gearing visible into FY26.</li>
<li>Index mechanics mask upside: Exclusion from GDX due to revenue-purity rules limits passive flows, leaving scope for active-driven re-rating as earnings and margins normalise</li>
</ul>


Earnings inflection is underway: Spot gold (&gt;USD 4,400/oz), rising self-mined output (60t in 2025E), and mix shift drive a step-change in EBITDA and cash flow from FY25 onward.
Valuation disconnect persists: Shandong Gold trades at ~3× EV/EBITDA—lowest in the China/HK gold peer set—despite leverage peaking in FY25 and de-gearing visible into FY26.
Index mechanics mask upside: Exclusion from GDX due to revenue-purity rules limits passive flows, leaving scope for active-driven re-rating as earnings and margins normalise


Shandong Gold: Earnings Inflection Underpriced by Index Mechanics