The Zhitong Finance App learned that Bank of America Securities released a research report saying that Jiangxi Copper shares (00358, 600362.SH) announced net profit of 11.69 billion yuan for the first nine months of this year, up 94% year on year, meaning net profit for the third quarter was about 3.05 billion yuan, up 65% year on year and 47% down from quarter to quarter, lower than the forecast. The bank reiterated the “buy” rating. The target price for H shares was HK$50 and the target price for A shares was 61 yuan.
The bank believes that the main profit contribution comes from higher copper prices and sulfuric acid prices. Copper prices increased 44% year over year, 6% from quarter to quarter, and sulfuric acid prices increased 181% year over year and 3% from quarter to quarter, but some offline projects partially offset the strength of the core business.
Although spot processing fees/refining fees (TC/RC) were negative during the year, the bank did not see a significant deterioration in the company's core smelting profits, as most copper concentrate purchases were covered by long-term contracts, and the 2026 benchmark TC/RC was settled at $0 per ton; the rise in sulfuric acid prices largely offset the weak TC/RC and supported smelting profits. Strong copper prices also benefited its mineral copper production.
The bank believes that copper prices and sulfuric acid prices are resilient, mineral copper exposure brings profit leverage, First Quantum's contribution has improved, and valuations are not expensive. Looking ahead, against a background of around $240 per ton in spot stock, the annual benchmark TC/RC may be lowered further, which is still the main risk for smelting profits in 2027.