Executive Summary
Zhaojin Mining reported QQ2 2025 revenue of 3,931,780,198 CNY, up 127.16% year over year and 100% quarter over quarter, with gross profit of 1,519,483,493 CNY and a gross margin of 38.65%. However, the quarter showed a material operating loss of 1,003,211,883 CNY (operating margin -25.52%), driven by elevated operating costs and notably high 'other expenses' of 2,080,005,514 CNY. The company still delivered a positive pre-tax income of 1,259,610,542 CNY and a net income of 780,510,787 CNY, aided by substantial total other income of 2,262,822,425 CNY. Diluted EPS stood at 0.21 CNY. EBITDA totaled 690,977,440 CNY, with an EBITDA margin of 17.57%, underscoring a divergence between core operating performance and non-operating income sources.
From a liquidity and balance-sheet perspective, near-term liquidity remains tight but manageable: current ratio is 0.995, quick ratio 0.587, and cash ratio 0.190. The company exhibits modest leverage with a debt ratio of 0.351 and a debt-to-equity ratio of 0.871; long-term debt to capitalization is 0.293, total debt to capitalization 0.465. Cash flow metrics remain constructive on an absolute basis, with operating cash flow per share of 0.364 and free cash flow per share of 0.231, suggesting some ability to fund capital needs and dividends if recurring operating performance improves. The stock trades at approximately 10.9x trailing earnings and 2.9x price-to-book, with a low dividend yield of about 0.1% in QQ2 2025, implying limited income return.
The earnings trajectory appears heavily influenced by non-operating items in QQ2 2025. While net income and EPS are positive, the persistence of an operating loss indicates that profitability hinges on non-recurring items rather than a sustainable improvement in core gold operations. Management commentary (where available) and industry dynamics suggest potential near-term upside from favorable gold pricing and potential optimization in operating costs; however, the absence of explicit forward guidance in the provided data adds to execution risk. Investors should monitor operating cost evolution, the durability of other income sources, and working-capital efficiency as drivers of medium-term earnings quality.