CICC: First coverage of JIAXIN INTL RES(03858) with "outperform industry" rating, target price of HKD 95. Firmly optimistic about the company's operational mechanism and development potential.

Zhongjin released a research report stating that JIAXIN INTL RES (03858) focuses on the operation of the Bakuuta tungsten mine in Kazakhstan and is optimistic about the company. The first coverage of JIAXIN INTL RES is given an outperform rating, with a target price of 95.00 Hong Kong dollars, based on the P/E valuation method, corresponding to 22.6/14.8x P/E for 2026-2027. Key points from Zhongjin are as follows: The global tungsten supply-demand situation may remain tight, and the central tungsten price is expected to steadily rise. On the supply side, the global tungsten supply is scarce and concentrated, with China's tungsten production accounting for the highest proportion globally in the long term. Domestic supply is facing pressure to contract due to declining ore grades and stricter production requirements. Overseas tungsten mine development is generally slow. Zhongjin expects the global primary tungsten supply to grow at a CAGR of +2.4% from 2023 to 2028. On the demand side, benefiting from emerging demands such as photovoltaic tungsten wire, AI PCB, and large-scale infrastructure projects, domestic tungsten consumption is overall positive. Against the background of continuous overseas geopolitical conflicts, strategic stockpiling demand is expected to open up. Zhongjin expects the global primary tungsten consumption to grow at a CAGR of +2.7% from 2023 to 2028. Zhongjin predicts that the global tungsten supply-demand relationship may remain tight in the long term, coupled with global tungsten inventories having been depleted to low levels, the central tungsten price is expected to continue to rise. Four core advantages are likely to make JIAXIN INTL RES a highly competitive mining leader in Central Asia: 1. Good resources. The Bakuuta tungsten mine has a large reserve, low cost, and excellent conditions for large-scale development. 2. Good location. The Bakuuta project location is superior with convenient transportation. Kazakhstan is rich in resources and has a favorable business environment. The company is expected to benefit from the permanent comprehensive strategic partnership between China and Kazakhstan and the support of the "Belt and Road" initiative. 3. Good mechanism. The mixed ownership structure and management team are expected to empower the company. 4. Good growth. The company has strong growth potential in terms of capacity expansion, deep processing expansion, and resource storage. Furthermore, the company is expected to become a leading non-ferrous company in developing resources in Central Asia and selling products globally. Profit forecast and valuation Zhongjin expects the company's EPS for 2025-2027 to be HKD 0.63, 4.18, 6.56 respectively, with a CAGR of 221.6%; and the net profit attributable to equity holders to be RMB 2.6, 17.2, 26.3 billion respectively. The current stock price corresponds to 16.5, 10.5x P/E for 2026-2027. The first coverage is given an outperform rating with a target price of 95 Hong Kong dollars, representing a 38% upside potential. Risk Production lower than expected; global tungsten supply exceeding expectations; insufficient demand; significant fluctuations in tungsten prices.