The Zhitong Finance App learned that UBS released a research report stating that it will drastically reduce the target price of Jiangxi Copper (00358) by 41.5% from HK$65 to HK$38, maintaining a “buy” rating. The bank lowered the target price-earnings ratio for the copper business from 12 times to 8 times the 2027 forecast, and lowered the 2026 and 2027 profit forecasts by 5% and 15%, respectively, mainly reflecting conservative assumptions about the average selling price of sulfuric acid and long-term contract processing fees, and declining profit visibility.
UBS said it maintains a constructive view on copper prices, believing that electrification, grid investment, and power infrastructure related to artificial intelligence are driving copper prices into a higher structural price range, while declining ore grades, long project development cycles, and limited capital expenditure have limited supply-side responsiveness.
However, the bank pointed out that the Jiangxi copper industry covers a mixed business model of mining, smelting, and futures hedging, making it difficult for higher copper prices to directly and continuously turn into profits like mining companies with strong upstream growth. The company's quarterly profit is still affected by factors such as regional sulfuric acid pricing, copper concentrate procurement, changes in processing fees, differences in confirmation time between futures and physical profits, and non-recurring investment income.
Within UBS's coverage, the bank favors the valuation and high-grade resources of Luoyang Molybdenum Industry (03993), as well as Zijin Mining's (02899) gold business exposure, and is relatively cautious about Jiangxi Copper's profit visibility.