Bank of America Securities: Raising the target price of Jiangxi Copper (00358) to HK$50, the medium-term net profit far exceeds expectations

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it will raise the target price of Jiangxi Copper (00358) shares by 16% from HK$43 to HK$50, and the target price for A shares (600362.SH) by 11% from RMB 55 to RMB 61, maintaining a “buy” rating. The bank raised Jiangxi Copper's net profit forecast for 2026 and 2027 by 37% and 46%, to 13.6 billion yuan and 15.4 billion yuan respectively. It is optimistic about resilient copper and sulfuric acid prices, potential upward profit growth in joint ventures, attractive valuation, and potential room for revaluation of the copper foil business as demand for artificial intelligence accelerates.

Bank of America Securities said that Jiangxi Copper's net profit in the first half of this year reached 8.63 billion yuan, a year-on-year increase of 107%, meaning net profit for the second quarter was 5.81 billion yuan, an increase of 162% year-on-year and 106% quarter-on-quarter. The performance exceeded the company's profit limit and far exceeded market expectations, mainly due to rising core product prices, increased sales volume, and a year-on-year increase in gross margin of 1.9 percentage points to 5.8%.

According to the report, although spot refining and refining costs (TC/RC) have fallen to a historically low of minus 180 US dollars per ton due to extremely tight copper concentrate supply, Bank of America Securities believes that the short-term profit impact on the Jiangxi copper industry is still manageable, mainly because the company has a high percentage of long-term contract coverage. In addition, the resumption of processing of stored ore at First Quantum's Cobre Panama mine should help the joint venture to recover profits; the average yearly increase in sulfuric acid prices since the beginning of the year was 169% year-on-year, which also supports the profitability of the smelting business.