New Stock Preview | Second-tier Listed Company Jin Xun Resources: High Income Growth, but Low Cash Reserves

With a family gene, this privately owned copper mining company in Congo and Zambia, JinSun Resources has seen a compound annual growth rate of up to 67% in revenue over the past three years, with plans to double production capacity quietly underway. It is understood that on December 1st, JinSun shares applied for a second listing on the main board of the Hong Kong Stock Exchange, with Huatai International as its exclusive sponsor. JinSun focuses on the development and supply of high-quality copper resources, and according to Frost & Sullivan data, based on production in Congo (Kinshasa) and Zambia, the company is ranked fifth among Chinese cathode copper producers in 2024, and is the only Chinese company in the top five in both jurisdictions. The company has a strong industrial chain business layout in resource-rich African regions, especially in Congo (Kinshasa) and Zambia, creating an integrated industrial chain covering mining, smelting, deep processing, and trading, with a global market presence. The company has shown excellent performance, with a compound annual growth rate of 66.7% in revenue and 55.5% in net profit from 2022 to 2024, with revenue and net profit in the first half of 2025 growing by 61.7% and 45%, respectively. JinSun shares have no financing history, currently held by Mr. Yuan Rong, with a shareholding ratio of 91.78%, and the company is essentially a family-owned enterprise run by two siblings. Despite strong performance, the company's cash flow is not abundant, with cash and cash equivalents of 127 million yuan on hand as of June 2025, and short-term bank borrowings of 176 million yuan. So, is this company's fundamentals worth looking into? Slow industry growth, low market share for the company It is known that JinSun shares mainly produce products such as cathode copper, copper concentrate, and cobalt hydroxide, belonging to the traditional resources industry, with production mainly in Congo and Zambia. In terms of industry size, for cathode copper, according to Frost & Sullivan, global production has grown at a low single-digit compound rate, with global production reaching 21.14 million tons in 2024, a compound growth rate of 2.1% over the past five years, of which China accounts for a high proportion of 55%, while Congo and Zambia account for 11.4%, with these three countries together accounting for close to 70% of global production. The cobalt industry has shown more impressive performance, with global production reaching 290,000 tons in 2024, a compound growth rate of 19.5% over the past five years, mainly driven by the rapid development of the electric vehicle and energy storage industries, with Congo (Kinshasa) still being the dominant player in the cobalt supply chain, accounting for 75.9% of global cobalt production in 2024, while Zambia's production capacity accounts for only 0.5%. JinSun shares have a low market share in Congo and Zambia, for example, in the field of cathode copper, in 2024, Congo (Kinshasa) had an annual production of approximately 1.8 million tons of cathode copper, with the top five Chinese producers accounting for over 20% of production, while the company's market share of 15.9 million tons accounts for 0.9% and ranks fifth in the industry, with the market share of the first-ranked company being 11.1%; in Zambia, the annual production is approximately 640,000 tons, with the top five Chinese producers accounting for over 25% of production, and the company's market share of 5,000 tons accounts for 0.8% and ranks fifth in the industry. Although Congo and Zambia are rich in mineral resources, they are not the core demand markets, and JinSun's products are mainly exported to China, Singapore, and Switzerland, especially Singapore, where the company has expanded its presence in 2025 and improved performance, with the income shares of the three countries in the first half of the year being 21.6% (mainland China 12.6%, Hong Kong 9%), 51.5%, and 13.4%, totaling over 86.5%. In addition, the company also has market coverage in the British Virgin Islands, Luxembourg, and Peru. Doubling production capacity, rising copper prices may bring opportunities Specifically, JinSun's core product is cathode copper, with a production volume of about 12,500 tons in the first half of 2025, maintaining a trend of rapid growth, with a continuous increase in quantity and price since 2022, with product prices increasing from 55,800 yuan/ton to 63,900 yuan/ton, and sales volume increasing from 58,900 tons to 130,000 tons, basically operating at full capacity. This has also driven high revenue growth for the business, with revenue shares of 85.9% in the first half of the year. On the other hand, the production of copper concentrate has been shrinking, with production decreasing from 1,178.4 tons in 2022 to only 9 tons, while cobalt hydroxide began operating in 2024 and produced 171 tons in the first half of this year, but these two product lines contribute low production volumes and have little impact on performance, with revenue shares of 0.1% and 1.2%, respectively. The company's product trading division has shown volatility in performance, with revenue declining in the first half of the year, contributing 12.8% of revenue, a decrease of 11.7 percentage points year-on-year. In terms of profitability, in the first half of 2025, the gross profit margin was 23.1%, a decrease of 1.3 percentage points year-on-year, while it was 26.8% in 2022, with the core product, cathode copper, experiencing a significant decrease from 47.3% to 25.2%, a decrease of 22.1 percentage points, indicating that price increases have been much lower than the growth in costs. However, expenses have been optimized, with the expense ratio decreasing from 9.5% in 2022 to 7.7%. The net profit margin in the first half of 2025 was 14%, a decrease of 1.6 percentage points year-on-year, but an increase of 0.9 percentage points compared to 2022. JinSun shares have high performance expectations, with their production capacity effectively reaching 100%, thanks to the company's strong service capabilities attracting industry-leading customers, with the top five customers contributing 67.8% of revenue in the first half of 2025, with the largest customer contributing 24.6%. In terms of production capacity, the company has four production facilities in Congo and Zambia. In Congo, it operates an advanced hydrometallurgical smelter with a designed annual production capacity of about 24,600 tons of cathode copper and 4,500 tons of cobalt hydroxide; in Zambia, this includes two wet-process metallurgical smelters with a total annual production capacity of about 6,600 tons of cathode copper and a copper concentrate flotation plant, with a combined cathode copper production capacity of about 30,200 tons in the two regions. JinSun shares plan to gradually expand their production, with the second phase of the Congo project expected to start in 2026, and when fully operational, total effective annual cathode copper production capacity will reach nearly 61,200 tons, potentially doubling performance, and with the scale of profits, their profitability is expected to further increase. The company is also actively expanding its global production capacity, setting up a wholly-owned subsidiary in Peru to enrich its production capacity layout. In summary, JinSun shares have solid fundamentals, although industry growth is average and market size growth is only in the single digits, the company's orders are strong, production capacity is close to full capacity, and although the gross profit margin has declined somewhat, overall profitability remains relatively stable. The company's main production capacity is in Congo and Zambia, with a low market share, but with active global capacity expansion, the company needs to explore financing channels due to its limited cash reserves, and this second listing application demonstrates the company's determination to go public. It is worth noting that copper prices have been on the rise in recent years, accelerating this year with an increase of over 20%, which has brought business opportunities to the copper-related industry chain, and JinSun shares are expected to attract more investor attention as a result.