CICC: Maintain JIAXIN INTL RES (03858) outperform rating, raise target price to HKD 158.3.

CICC releases a research report stating that they are optimistic about the production expansion of JIAXIN INTL RES (03858) in Bakuta and the growth potential of developing non-ferrous resources in Central Asia. They maintain an outperform industry rating, considering profit adjustments and Hong Kong stock liquidity, and raise the target price by 67% to 158.3 Hong Kong dollars, corresponding to a 2026/2027e 18.0/10.9x P/E. There is a 52% upside potential. The 2026-2027e net profit attributable to shareholders is raised by 110% / +122% to 40.1 / 66.4 billion Hong Kong dollars, with the current stock price corresponding to 11.8 / 7.1x P/E. CICC's main points are as follows: The company's performance in 2025 slightly exceeded the bank's expectations. The company announced its performance in 2025: it achieved a historic breakthrough by turning losses into profits for the first time. The company's revenue and gross profit were 1.06 and 0.52 billion Hong Kong dollars, with a gross profit margin of 49%; net profit attributable to shareholders was 0.31 billion Hong Kong dollars. Due to the smooth release of tungsten concentrate production and the operation of strong tungsten prices, the company's performance slightly exceeded expectations. The global tungsten supply-demand relationship continues to be tight, with the average price of tungsten concentrate as of the end of March 2026 reaching 730,000 yuan. The current price of tungsten is around one million yuan. The bank expects the average price of tungsten concentrate in 2026-2027 to be 800,000 and 900,000 yuan per ton. In April 2025, Bakuta tungsten mine entered commercial production phase one, becoming the first profitable project among major global supply increment projects. In terms of production, the company's tungsten ore selection volume in 2025 was 2.8 million tons, with 65% of tungsten concentrate production/sales volume at 5008/4879 tons, gradually increasing in scale. In terms of price, the average selling price of the company's tungsten concentrate was 196,000 RMB (excluding tax), close to the average price of domestic tungsten concentrate from April to December 2025. In terms of cost, the bank calculated the pre-tax full cost of the company's tungsten concentrate for the whole year at 139,000 Hong Kong dollars per ton. Thanks to the simultaneous increase in volume and price of tungsten concentrate business and cost control ability, the company's net profit attributable to shareholders reached 310 million Hong Kong dollars, turning positive year-on-year for the first time. In terms of cash flow, the company's operating cash flow turned positive historically, and financial leverage was significantly optimized. The company's net cash flow from operating activities, investing activities, and financing activities in 2025 was +5.1, -1.1, +5.8 billion Hong Kong dollars. The company's asset-liability ratio was 55%, a significant decrease of 46 percentage points year-on-year. Continuing to advance the construction of Bakuta Phase Two, the ore processing volume is expected to increase by 50% compared to Phase One after completion. The company plans to build an ore sorting system and integrate it into the existing mining process from 2027, increasing the ore processing volume to 4.95 million tons per year, 50% higher than the Phase One level of 3.3 million tons. After completion, the company expects the long-term annual output of tungsten concentrate to exceed 10,000 tons, strengthening the position of Bakuta as the world's largest open-pit tungsten mine. Complementary advantages of the management team, coupled with increasingly abundant cash flow, are expected to empower the company to further develop non-ferrous resources in Central Asia. As of the end of 2025, the company's three major shareholders Fangheng Zhao International, Jiangxi Copper, and China Railway Construction Corporation held 31.3% / 30.1% / 10.8% of the shares. The bank believes that the company is expected to benefit from a flexible decision-making mechanism and the strong industrial capabilities of state-owned enterprises. Risks: company production volume is lower than expected; insufficient downstream demand; significant fluctuations in tungsten prices.