BofA Securities: JIANGXI COPPER (00358) Q3 earnings below expectations; reiterates "Buy" rating

BofA Securities issued a research report stating that JIANGXI COPPER (00358, 600362.SH) reported net profit of RMB11.69 billion for the first nine months of this year, up 94% year-on-year, implying third-quarter net profit of approximately RMB3.05 billion, up 65% year-on-year but down 47% quarter-on-quarter, below the bank's expectations. The bank reiterates its "Buy" rating, with an H-share target price of HK$50 and an A-share target price of RMB61. The bank believes the main earnings contribution came from higher copper and sulfuric acid prices, with copper prices up 44% year-on-year and 6% quarter-on-quarter, and sulfuric acid prices up 181% year-on-year and 3% quarter-on-quarter, though certain below-the-line items partially offset the strength of the core business. Although spot treatment charges/refining charges (TC/RC) were deeply negative during the year, the bank did not see significant deterioration in the company's core smelting profitability, as most copper concentrate purchases are covered by long-term contracts and the 2026 benchmark TC/RC has been settled at US$0 per tonne; rising sulfuric acid prices broadly offset weak TC/RC and supported smelting profitability, while strong copper prices also benefited its mined copper output. The bank believes copper and sulfuric acid prices are resilient, mined copper exposure provides earnings leverage, First Quantum's contribution is improving, and valuation is inexpensive. Looking ahead, with spot at approximately negative US$240 per tonne, the annual benchmark TC/RC may be further lowered, which remains the main risk to smelting profitability in 2027.