The Zhitong Finance App learned that Bank of America Securities released a research report saying that in order to reflect lower performance expectations for the first half of the year, Zijin Gold International (02259)'s net profit forecast for 2026 and 2027 was lowered by 6% to 3 billion US dollars and 3.2 billion US dollars, mainly due to an increase in unit cost assumptions. Based on an unchanged 8% weighted average capital cost and 2% terminal growth rate assumptions, the bank also lowered its target price by 11% from HK$158 to HK$140. The bank reiterated its “buy” rating, believing that it could benefit from the increase in production seen from 2026 to 2027, as well as the potential to normalize unit costs after newly acquired assets are put into operation and one-time expenses for RG mines subside.
According to the report, Zijin Gold International is making a profit. The net profit for the first half of 2026 is expected to be about 1.4 billion US dollars, an increase of 169% over the previous year. However, it is only equivalent to 44% and 38% of the bank's and market forecasts for the full year, which is lower than expected. The bank estimates that for the second quarter, net profit was 593 million US dollars, up 67% year on year and down 27% from quarter to quarter. The bank believes that the lower performance is mainly due to higher unit costs than expected and production growth slower than expected. Management said that the weak performance in the first half of the year was mainly affected by factors such as rising energy costs and one-time expenses from RG mines; non-linear increases in production due to multiple mines in the consolidation and expansion phase; and weather disturbances. In terms of production, gold production in the first half of the year was 27 tons, equivalent to 46% of the annual production guideline of 59 tons. Management is still confident that the annual guideline will be achieved. The bank expects profit for the second half of the year to be roughly the same as in the first half of the year, as the gold price forecast was lowered to $4,075 per ounce (down 13% from half year to year), which will be offset by increased production driven by the continued operation of Akyem and RG mines.