BofA-CMOC Group Ltd(H)1H25 NPAT 百分之60 YoY, continued copper-led earning growth...-20250825

1H25 NPAT +60% YoY at RMB8.67bn, best in history

CMOC announced 1H25 NPAT of RMB8.67bn, +60%yoy, in line with profit, setting a newrecord for semi-annual profit. 2Q25 NPAT reached RMB4.725bn, +20%qoq/+41%yoy. 1Hnet operating cash flow +11%yoy at RMB12bn, and asset-liability ratio -9ppt YoY at50%. Key highlights: 1) DRC segments: Powered by continued technical reform of TFMand KFM, company produced 353kt of copper in 1H25, +13%yoy, achieved 56% of FY25guidance. Coupled with rising copper prices, copper GP +32%yoy and contributed ~60%of company gross profit. Cobalt output +13%yoy at 61kt, achieved 55% of FY25guidance. While sales -9%yoy at 46kt on DRC export ban, cobalt GP +93%yoy due torising cobalt price and a/c for 15% of total GP. 2) Other segments also achieved 51-56% of FY25 production guidance. Niobium increased 3%yoy at 5.2kt, and phosphatefertilizer flattish at 583kt; molybdenum output -5%yoy at 7kt, tungsten -2%yoy at 3.9kt.These mined products each a/c for 3-5% of company GP. On IXM, 1H25 mineral tradingvolume has reached 2,183kt, -13% yoy (51% of guidance). 3) Cost reduction: companyachieved cost reduction and efficiency enhancement across regions, with operating cost-11%yoy. TFM and KFM optimized their processes and implemented digital innovations.

Higher metal prices QoQ in 3Q, volume on-track

We raise CMOC FY25E earnings by 8% and earnings of outer years by 4-18% to factor in1) mark-to-market commodity prices in 2H -- in 3QTD, benchmark copper price +3%,molybdenum +14%, tungsten +18%, niobium+5% & phosphate +8% QoQ – we see therising metal prices would continue to support its earning in 3Q; 2) we are raising coppervolume by 4-12% across future years driven by company efforts on efficient production,technical reform and expansion of TFM&KFM; 3) the newly acquired Lumina Gold to becommenced in ‘29. As such, we raise H-share PO from HKD8.5 to HKD12 based on DCF,with a WACC of 8.3% and terminal rate of 1% (unchanged assumption). CMOC-H iscurrently trading at 13x 2025E PE, undemanding vs. LT avg. of 15x and global peers’20x. Reiterate Buy on our positive view on copper, the expansion of TFM & KFM to 0.8-1mnt of copper by ‘28, and solid B/S.