Bank of America Securities: Zijin Mining (02899)'s net profit for the third quarter was lower than expected, production was weak and costs rose

The Zhitong Finance App learned that Bank of America Securities released a research report saying that Zijin Mining (02899)'s net profit for the third quarter was lower than expected, production was weak and costs were rising. The bank believed that the stock valuation was not expensive, maintained a “buy” rating and target price of HK$43, and was optimistic about the copper price prospects and continued growth in production. The bank believes that there is a downside risk in the annual gold and copper production targets, while lithium production is generally in line with progress.

Zijin Mining's net profit for the first nine months of this year was 57.5 billion yuan, up 52% year on year, meaning that net profit for the third quarter rose 26% year on year and fell 4% from quarter to quarter to about 18.4 billion yuan, lower than the forecast of this bank. The bank pointed out that in the third quarter, the consolidated gross margin expanded by 0.7 percentage points to 39.9%, but mining gross margin contracted 1.3 percentage points to 66.5%, which was partly offset by lower actual prices of gold and higher unit costs of gold/copper. Mining copper production in the third quarter was 281,000 tons, up 6.9% year on year and 2.2% quarter on quarter, lower than the forecast, mainly due to Kamoa-Kakula's continued weakness; mining gold production was 23.4 tons, down 1.4% year on year and 1.0% from quarter to quarter. Lithium production increased 30% quarterly to 35,500 tons, and unit costs fell 21.4% quarterly to RMB 27,752 per ton.