JPM-CMOC-A H Raising PT：Macro and Copper price outlook a more important share price driver-20250825

CMOC-A/H rallied 8.7%/10.5% on August 25 after a solid 1H25 earnings printand an increasing US rate cut expectation. We believe the strong volume growthof copper/cobalt is on track to meet the upper end of the full-year guidance. 3Qearnings from the cobalt segment (~10% of GP) might be negatively impacted byDRC’s export ban, but investors are willing to look pass it as the copper price is amore important share price driver. With a positive copper price outlook, we haverevised down our FY25 earnings forecasts by 2% to reflect the impact of theextended DRC export ban and we revised up earnings forecasts for FY26/27 by5%/8%. Our revised CMOC-A PT of Rmb14 is based on 1.0x P/NAV and impliesFY26E 17x P/E and 7.6x EV/EBITDA, in-line with the historical average butslightly below overseas peers. Our CMOC-H PT of HK$13.5 is based on an 11%average 3-month A/H premium. OW maintained.

Solid 1H25 earnings, positive copper outlook to offset impact of DRCexport ban. CMOC’s 2Q25 NPAT came in at Rmb4.7bn (+41% YoY, +20%QoQ), largely in-line with preannounced Rmb4.2-5.2bn. GP remained solid atRmb8.9bn and was slightly down by Rmb368mn QoQ, despite DRC export ban.2Q25 GP from IXM spot trading (concentrate + refined metal) + fair value gainwas Rmb1.2bn (vs. Rmb744mn of 1Q25), indicating improving earningscontribution from the IXM business. LME copper price is trading at ~$9,800/t asof August 25, which is 4% higher than 1H25 average of $9,431/t. We expect ahigher mark-to-market commodity prices and a positive copper price outlook tofurther support its 2H25 earnings as well as share price.

Strong volume growth continued with decent margin. 2Q25 copperproduction was 183kt (+10% YoY, +7% QoQ), with 1H25 output hitting 56% offull-year guidance. 2Q25 cobalt output remained stable at 30.7kt (+6% YoY, +1%QoQ), with 1H25 output also hitting 56% of full-year guidance. We seeincreasing possibility for the company to surpass its guidance of 650kt copper inFY25. Margin-wise, as copper price was largely rangebound in 2Q25 given backand forth of US tariffs (SHCJ average copper spot +1% QoQ), 2Q25 copperGPM remained stable at 52% vs. 55% of 1Q25. Cobalt margin has furtherimproved to 63% vs. 61% due to increasing cobalt price from export ban.

Revise up PT to Rmb14/HK$13.5. We revised down our FY25 earningsforecasts by 2% to reflect the impact of the extended DRC export ban butrevised up earnings forecasts of FY26/27 by 5%/8% to factor in our LT positivecopper price outlook and CMOC’s production volume growth. Our updatedforecasts are 1-6% ahead of Bloomberg consensus. Our revised CMOC-A PT ofRmb14 is based on 1.0x P/NAV and implies FY26E 16.8x P/E and 7.6xEV/EBITDA, in-line with historical average but slightly below overseas peers.Our CMOC-H PT is based on an 11% average 3-month A/H premium to our A-share PT .