Huatai Securities is optimistic about the value enhancement of CMOC, raising the target price to 33.95 yuan

Huatai Securities' research report points out that it is optimistic about the value enhancement of CMOC (03993.HK), with reasons including a favorable outlook on the upward cycle of copper and gold prices; the company is a domestic leader in the copper mining industry with good growth potential; the newly focused layout of gold may lead to a transition from "copper" valuation to "copper + gold" valuation; maintaining a "buy" rating.

The firm stated that after 2022, the global financial and trade systems are increasingly fragmented; the demand for "diversification" of foreign exchange reserves has become a long-term cornerstone for the rise in gold prices. If the proportion of gold in central bank reserves returns to the historical median level of 34%, global central banks' accumulation of gold may continue until 2035. This year, the actual interest rates in the U.S. may trend downward, combined with a fluctuating and weakening dollar, which is beneficial for further increases in gold prices.

Regarding copper, the firm expects that from 2025 to 2028, copper prices are likely to exceed USD 15,000 per ton. Looking ahead to this year, it is anticipated that global electrolytic copper supply will remain limited, with an annual growth rate of 2.4%. In the medium to long term, global technological advancements combined with the recovery of overseas manufacturing may keep electrolytic copper demand high amid multi-cycle resonance; while supply constraints are relatively strong.

Considering that copper prices have risen significantly since the end of last year due to marginal liquidity easing, exceeding Huatai Securities' previous expectations, the firm has adjusted its copper price assumptions for 2025 to 2027; raised the group's copper production assumptions; ultimately, it expects the company's net profit attributable to the parent to be RMB 20.4 billion, RMB 32.4 billion, and RMB 36.1 billion, with adjustments of 6%, 26%, and 27% respectively compared to previous values.

Huatai Securities also considers that the group is a growing domestic leader in the copper mining industry and is expanding into the gold business, maintaining a 35% premium for CMOC (603993.SH) A shares, assigning a price-to-earnings ratio of 23.7 times for 2026, and lowering the A share H share premium to 18.22%, calculating the A share target price from RMB 24.19 to RMB 35.83, and the H share target price from HKD 21.27 to HKD 33.95