Furui: It is expected that the gold business will account for over 10% of the gross profit of CMOC Group Limited (03993) by 2030, and we recommend a "buy" rating.

Furui released a research report stating that CMOC Group Limited (03993) announced in December last year the acquisition of Equinox Gold's gold assets portfolio in Brazil, with the highest acquisition consideration of approximately $1 billion. The related transaction has been completed. The bank's asset net value analysis shows that its implied gold price is about $3,320 per ounce, compared to spot gold prices exceeding $5,000, while the average price from the beginning of the year is above $4,500. The bank now gives CMOC Group Limited's H shares a target price of HK$25.9, and CMOC Group Limited (603993.SH) gives A shares a target price of RMB 26.7, both with a "buy" rating. In the company's mid-year business update last year, it stated that gold will become another business pillar for the company in addition to copper. Management believes that with the cost calculation of about $1 billion for this acquisition, they expect to receive a reasonable return and have a constructive view on gold. In addition, management also mentioned the possibility of further reducing the operating costs of the acquired assets, including synergies, efficiency improvements, and providing more competitive procurement and supply chain management. In terms of long-term gold production targets, the bank expects that after the Brazil and Ecuador projects achieve full production, the annual gold production will reach 20 tons. Without considering further expansion or acquisitions, it is estimated that gold will account for 5% to 6% of CMOC Group Limited's gross profit in 2026, and increase to over 10% in 2030. Management's preliminary goal is to double gold production by 2030, mainly through mergers and acquisitions.