The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it maintains the Luoyang Molybdenum Industry (03993) “gain” rating and a target price of HK$25, and maintains a positive view on copper prices. The bank believes that the company's third-quarter results are slightly lower than expected, cost inflation and cash flow are expected to be the focus of investors' attention, and the stock price reaction after the results are announced may be relatively lackluster.
Luoyang Molybdenum's net profit for the third quarter was RMB 7.9 billion, up 175% year on year and down 6% from quarter to quarter; net profit for the first nine months was RMB 24 billion, up 68% year on year, equivalent to about 73% of the market's annual forecast.
The bank pointed out that third-quarter results were slightly lower than expected, mainly due to higher copper unit costs than expected, copper shipments falling 2% quarterly to 191,000 tons, and negative operating cash flow and free cash flow in the third quarter. The unit sales cost of copper increased by 39% quarterly to RMB 45,300 per ton in the third quarter, reducing the gross margin of copper by 5.6 percentage points to 56.5% from quarter to quarter.
On the positive side, the company's production of major metals such as copper, cobalt and gold in the first three quarters was generally in line with annual guidelines. In the third quarter, cobalt sales increased 86% month-on-month to 6,900 tons. The bank expects the market to slightly lower the company's profit forecast for 2026, mainly reflecting higher copper unit cost assumptions, slow confirmation of copper and cobalt sales, and weak cash conversion.