The first shot in the mid-year reports of resource stocks: Shengda Resources benefits from more than just rising precious metal prices.

On June 29th, Shengda Resources released its 2026 first-half performance forecast, expecting net profit attributable to shareholders of 350 million to 400 million yuan for the first half, a year-on-year increase of 399.31% to 470.64%. This figure is sufficient to place Shengda among the high-growth samples in the A-share interim report forecasts, but the more critical signal lies within the growth structure.

The company mentioned that after the technical upgrade of its wholly-owned subsidiary Jinshan Mining, its mining and beneficiation capacity has improved, and production capacity is gradually being released, leading to increased product output and sales in the first half of 2026; coupled with rising precious metal prices, the sales prices of the company's main mine products have increased year-on-year.

This forecast precisely hits the core shift in resource stock pricing for 2026: prices are responsible for opening up profit elasticity, production capacity is responsible for verifying the profit center, and governance and cash flow are responsible for determining the valuation ceiling.

Currently, Shengda Resources has short-term performance catalysts and medium-term mine release, but in the long term, it still faces the test of whether the governance discount can be repaired.

Capital Begins to Shift from Price Increase Expectations to Performance Verification

The trading logic of the precious metals sector usually revolves around gold and silver prices. Gold benefits from geopolitical risks, real interest rate expectations, and central bank purchases, while silver has both financial and industrial attributes. During the risk appetite recovery phase, the market often first buys price beta; as long as metal prices remain strong, the sector easily attracts capital inflows.

However, entering the interim report window, price increases are only the first catalyst. Whether performance can be realized depends on whether mining companies have production volume increments, cost thinning, and cash flow recovery. The early stage of resource stock rallies relies on sentiment, the second stage relies on the income statement, and the third stage enters asset revaluation. Shengda Resources' current forecast is at the transition point from the second to the third stage.

Data shows: Shengda Resources' first-quarter net profit attributable was 79.4054 million yuan, and the first-half forecast is 350 million to 400 million yuan. Based on this range, the second-quarter single-quarter net profit attributable is estimated to be between 270 million and 320 million yuan, showing a significant sequential increase. This change is more informative than the year-on-year growth rate. High year-on-year growth may come from a low base, while the sequential jump in the second quarter indicates that the company's profit elasticity is being concentratedly released.

For the revaluation of resource stocks, metal price increases alone are far from enough. Metal prices are unstable; once they fall, the market will quickly revise down profit forecasts, and the trading logic will revert from performance realization to price speculation. However, Shengda has broken down its growth sources into two parts: rising precious metal prices driving sales price increases, and Jinshan Mining's capacity release after technical upgrades driving increased production and sales. When both price and capacity move upward, there is an opportunity for revaluation.

In other words, Shengda Resources has provided the market with a more specific calculation problem: during the high-price phase of gold and silver, how much profit can new production capacity contribute? Can production release dilute unit costs? Can the profit expansion in the second quarter continue into the second half of the year? These questions are closer to the underlying logic of the company's valuation than "will precious metals continue to rise?".

Resource Stocks Currently Place More Emphasis on the Certainty of "Volume"

The core change for Shengda Resources currently comes from Jinshan Mining. The statements in the announcement regarding technical upgrades, improved mining and beneficiation capacity, and capacity release are not complicated, but they carry significant weight within the pricing system of mining companies.

Besides current profits, resource reserves, equity ratio, mine grade, mining and beneficiation capacity, recovery rate, unit cost, and safety and environmental constraints all affect the valuation the market assigns. Price increases will improve profit elasticity, but new production capacity will raise the profit center. The release of production and sales after Jinshan Mining's technical upgrade means that Shengda Resources' profit growth now has the leverage of internal capacity realization.

This is also the difference between resource stocks and most manufacturing companies. Manufacturing expansion is often accompanied by price competition, capital expenditure, and depreciation pressure; mining assets releasing capacity during an upcycle can more easily amplify profit margins with new output. Especially during periods when gold and silver prices remain high, every ton of ore and every unit of metal output can be repriced at higher prices.

In terms of resource stocks, market preferences are also slowly changing. The growth narrative favoring new energy metals like lithium, cobalt, and nickel has gradually faded. After changes in the supply-demand cycle, some new energy metals experienced valuation compression, while precious metals and scarce resources have once again become directions for capital seeking certainty. Gold represents hedging, silver has both financial and industrial attributes, and lead, zinc, and other varieties depend more on supply-demand and cost curves. Shengda Resources, with silver as an important label and post-upgrade capacity release from its mines, has certain advantages in this round of resource stock re-stratification.

The company's increase in equity in Deyun Mining to 74% in late June can also be understood within the same capital story. Deyun Mining's Bayanbaolege mining area silver polymetallic mine has a licensed annual production scale of 900,000 tons. After the equity ratio increase, the market will naturally reassess the company's resource control and future capacity space. For resource stocks to tell a long-term story, talking only about metal prices is not enough; one must also discuss equity resources, capacity timing, and asset integrity.

Of course, to truly enter the valuation framework of "mine capacity release + resource asset revaluation," subsequent performance depends on the mining company's ability to deliver, requiring verification through grade, recovery rate, safety and environment, costs, and cash flow. Shengda Resources has already provided the profit-side result with its interim report forecast. The subsequent semi-annual report needs to further answer operational questions: whether operating cash flow has improved simultaneously, whether gross margin has truly expanded, whether new production and sales volumes are sustainable, and whether mine ramp-up brings additional capital expenditure pressure.

Shengda Resources' Valuation Ceiling Also Depends on Trust Repair

Shengda Resources' current capital story is not short of catalysts, but

there are also obvious suppressants. On June 15th, Shengda Resources announced that the company and its actual controller were under investigation by the CSRC for suspected illegal information disclosure. The company had previously disclosed non-operational fund occupation by the controlling shareholder and its affiliates, stating that all occupied funds and interest had been recovered and that production and operation activities were proceeding normally. Even so, governance issues will still affect the position limits of institutional funds and the valuation discount.

Resource stocks can rely on price cycles for profit elasticity and on capacity release for profit recovery, but governance discounts do not disappear automatically. For the market, mining assets themselves already have cyclical fluctuations, production safety, environmental constraints, and metal price uncertainties. If information disclosure and internal control issues are added, capital will demand a higher risk premium. The result is that while company profits can recover, valuations may not recover in sync.

This is precisely the core conflict point for Shengda Resources going forward: the fundamentals are improving, but governance needs to catch up; the income statement is expanding, but the capital market still needs to see if trust can be repaired.

From Shengda Resources' interim report forecast, we can gain a good understanding of the current situation in resource stocks: the market is shifting from trading metal prices to screening mining companies capable of transforming price cycles into production, profits, cash flow, and resource control.