Goldman Sachs released a research report saying that Zijin Mining (02899) continues to be on the “convinced buy list” and maintains a “buy” rating, and the target price for H shares remains unchanged at HK$21.5. The bank maintains its forecast that a small number of purple metal miners will simultaneously benefit from rising production and commodity prices. Zijin's net profit from regular business is expected to reach 41.3 billion yuan in 2026, compared with 22.4 billion yuan last year, with a compound annual growth rate of 23%. The bank estimates that Zijin's stock price reflects the price of copper, which is 22% lower than the spot copper price.
According to the bank, Zijin Mining's third-quarter results were in line with the bank's expectations and were higher than market expectations. Operating cash flow rose 40% simultaneously in the first three quarters, free cash flow increased 9 times at the same time, and the net debt ratio fell from 115% at the end of last year to 90% in the third quarter. The bank lowered Zijin's earnings forecast for this year and next two years in the 2% to 5% range, reflecting a reduction in copper price forecasts and production expectations for Kamoa copper in the Democratic Republic of the Congo (DRC), partially offset by an increase in the gold price forecast. The bank lowered Zijin's copper production forecast for this year and next two years by 2%, reflecting Kamoa copper mine's production reduction guidelines due to unstable electricity supply, but copper production is still expected to increase by 8% to 10% during the period. Zijin recently announced the acquisition of Akyem Gold Mine, which may provide room for a 7% increase in gold production and 2% profit next year.