- Earning decline for 2Q23 due to drop in copper prices despite sales volume growth, slightly below our expectation.
- 2H23 earnings to be flattish as copper prices are likely to be lukewarm.
- Retain BUY call and earnings forecasts to be reviewed after releasing full results.
What’s New? Zijin Mining’s net profit fell by 26.9% y-o-y and 12.6% q-o-q to RMB4.8bn in 2Q23, slightly below our expectation. Despite the mined production y-o-y increases in all metals, gold (+15.2%), copper (+13.8%), zinc (+42.8%), and silver (+12%), drop in metal prices such as copper and zinc (-11% and -35.5% y-o-y) have pressured its earnings. Overall, the 1H23 net profit declined by 19.2% y-o-y, however, made a strong recovery of 37.6% h-o-h to RMB10.2bn.
Our take. We expect that 2H23 earnings will be flattish as copper prices are likely to be lukewarm in near-term due to sluggish economic activities in China. Despite weak copper prices, sales volume growth in copper and gold will support its earnings. We expect copper prices will rebound in the end of the year backed by consistent demand growth in the energy transition and EV sector and China’s stimulus measures. Retain BUY call at solid earnings delivery, backed by sales volume growth despite weak metal prices and earnings forecasts to be reviewed after releasing full results.
