UBS: Significantly cuts Jiangxi Copper target price to HK$38, lowers profit forecast

UBS issued a report stating that it has sharply cut its target price for Jiangxi Copper from HK$65 to HK$38, maintaining a "Buy" rating. The bank lowered the target P/E ratio for the copper business from 12x to 8x on 2027 forecasts, and cut its 2026 and 2027 earnings forecasts by 5% and 15% respectively, mainly reflecting more conservative assumptions for average sulfuric acid selling prices and long-term contract treatment charges, as well as reduced earnings visibility. Within the bank's coverage, it prefers China Molybdenum for its valuation and high-grade resources, and Zijin Mining for its gold exposure, while being relatively cautious on Jiangxi Copper's earnings visibility. The bank stated that its constructive view on copper prices remains unchanged, believing that electrification, grid investment and AI-related power infrastructure are driving copper prices into a higher structural range, while declining ore grades, long project development cycles and constrained capital expenditure are limiting supply responses. However, Jiangxi Copper's business model combining mining, smelting and futures hedging means that higher copper prices do not earnings as directly and sustainably as they do for miners with stronger upstream growth. Quarterly earnings remain affected by regional sulfuric acid pricing, copper concentrate procurement, changes in treatment charges, the timing of recognition of futures versus physical profits, and non-recurring investment gains.