Goldman Sachs slightly cut Zijin Mining’s target price, kept it on Conviction Buy list

 

>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<

 

 

Zijin Mining’s first-half net profit fell by 18% year over year to 10.3 billion yuan and excluding one-offs including fair value gains, reversal of impairment loss and FX gains, the recurring net profit amounted to 10.42 billion yuan, missing Goldman Sachs forecast by 8% and below the street consensus, said Goldman in a note. 

That’s mainly due to the weaker-than-expected earnings from gold and zinc, reduced volume at gold mines and increased cost per unit, it said.

The company’s copper mining business was better-than-expected, with copper mining volume rising by 17% from a year earlier, and the average realized copper price was 51,000 yuan per tonne, down 8% from a year earlier, better than the average 11% drop for the industry, Goldman said. 

Goldman cut the forecast of Zijin Mining’s earnings in 2023 – 25 by 11-12% and expected of its recurring net profit to rise from 21.8 billion yuan in 2022 to 43.8 billion yuan in 2025, implying a CAGR of 26%, mainly driven by production growth and higher copper prices, it said, adding that Zijin is expected to be one of the few mining companies to benefit from volume uptick and rising commodity prices.

It maintained the stock’s trading at Buy and kept in on the Conviction Buy list. The target price was cut slightly from HK$19 to HK$18.