The company's 2015 performance fell short of market consensus expectations and our estimates. The company's revenue fell 20.8% year over year to RMB 2.69 billion, and shareholders recorded a loss of RMB 740 million.

We expect nickel prices to rebound in 2016 but remain low, and we expect copper prices to continue to fall in 2016 due to oversupply. We expect nickel prices to fluctuate around 10,000 US dollars/ton in 2016, and copper prices to fluctuate between 4,500-6,000 US dollars/ton.

The company plans to produce 11,800 tons of electrolytic nickel and 10,000 tons of electrolytic copper in 2016. The company intentionally slowed its expansion due to falling metal prices.

We believe that the disposal of the copper smelting business will have a positive impact on the company's development. The disposal of copper smelting assets will significantly improve the company's overall profitability and balance and liability levels.

Xinxin Mining's target price was lowered to HK$0.70 to maintain its “neutral” rating.