Goldman Sachs reviews China base metals and gold 2025A earnings: upgrade Chalco-H/A to Neutral, remain constructive on copper and gold names

Overview

This report reviews the 2025A earnings of China base metals and gold companies covered by Goldman Sachs, covering 11 stocks across aluminium, copper and gold. Overall, recurring profits rose year-on-year across all companies, with copper and gold profit growth faster than aluminium. Aluminium names were in line with or below expectations, most copper names were below Goldman expectations due to higher costs, while Zhaojin was above expectations due to a lower tax burden. The report also updated 2026-27E earnings forecasts, 12-month target prices and stock-level investment views, and upgraded Chalco-H/A from Sell/Sell to Neutral/Neutral.

Core views

Goldman's core view is that 2026E rising metal and gold prices will continue to support profit growth in base metals and gold companies, with most companies likely to see recurring profit growth of 42%-114% year-on-year. Copper and gold names still have stronger profit leverage and valuation attractiveness, so Buy ratings are maintained; while aluminium spreads may be supported in the near term by Middle East supply disruptions, spread normalization is expected to emerge from 2H26E onward as new supply expands, so Chalco and Hongqiao remain under a neutral framework.

Analysis framework

The report starts from the gap between 2025A actual results and Goldman/market consensus expectations, then reconsiders 2026-27E forecasts by incorporating management guidance on 2026E output, capex, costs and dividends. For aluminium names, the focus is updating SHFE aluminium price and spread assumptions; for copper names, it focuses on copper, cobalt and select-mineral pricing, costs, output expansion and M&A projects; for gold names, it focuses on in-house mine output, Haiyu ramp-up timing and gold price assumptions.

Methodology notes

• profit forecast2025A performance review and 2026-27E profit revisions

  Adjust forward profit forecasts based on actual performance, price assumptions, output guidance and cost changes.

  Goldman raised 2026-27E recurring profit forecasts for aluminium names by 1%-45%, raised CMOC by 0%-4%, reduced Jiangxi Copper by 5%-9% and reduced Zhaojin by 4%-5% to reflect changes in price, cost and output assumptions.

• Valuation methodsimplied commodity pricing and historical valuation ranges

  Infer implied metal prices or spreads from current stock prices and compare them with spot levels and historical valuation ranges.

  The report notes that current stock prices imply aluminium prices or spreads for Chalco and Hongqiao that are close to spot, while Zijin-H and CMOC-H current prices imply copper prices below spot, supporting Goldman’s valuation appeal view.

• industry supply-demandaluminium spread normalization path

  Aluminium spreads are shaped by supply disruptions and new capacity additions, staying elevated in the near term but under normalization pressure over the medium term.

  Goldman expects SHFE aluminium spreads of Rmb8,900/t in 1H26E, Rmb6,500/t in 2H26E and Rmb4,250/t in 2027E; disruption at Middle East smelters may cause upside risk, but expanding supply from 2H26E onward should push spreads toward normalization.

• corporate eventsimpact assessment of M&A and expansion projects

  Evaluate the potential contribution of M&A or expansion projects to future output, profit and capital expenditure.

  The report discusses Chalco’s proposed CBA acquisition, Zijin’s planned 25.85% stake in Chifeng Gold, Jiangxi Copper’s Solgold acquisition, CMOC’s KFM Phase 2 and gold projects, MMG’s Khoemacau expansion, and Zhaojin’s Haiyu startup.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Chalco-H/A (2600.HK/601600.SS)

  China's largest aluminium and alumina producer; the report upgrades it from Sell/Sell to Neutral/Neutral.

  Strengths

  2025A recurring profit met expectations and dividend payout ratio rose to 37%; if high aluminium spreads persist, 2026E profit could be about 19% above base case.

  Weaknesses

  Current stock-price-implied aluminium price or spread is close to spot, leaving limited upside; medium-term aluminium spreads are under normalization pressure.

  Comparison

  Valuation is around 7x/8x PE in 2026E, near the historical H-share range of 5-9x and A-share range of 7-11x.

  Risks

  Aluminium and alumina price volatility, policy changes in primary aluminium capacity caps, green demand below expectations, and unexpected secondary aluminium supply.

• Hongqiao (1378.HK)

  Large aluminium producer, Neutral rating maintained.

  Strengths

  Dividend yield is about 8%, and payout ratio remains high; 2026-27E recurring profit forecast was raised by 1%-24%.

  Weaknesses

  2025A recurring profit missed expectations as alumina and aluminium unit costs were higher than expected; current stock-price-implied spread is close to spot, limiting upside.

  Comparison

  If the high spread persists, 2026E profit implies around 7.3x PE, within the historical range of 4-9x.

  Risks

  Spread compression, persistent high costs, substitution demand, unexpected shifts in secondary aluminium supply, and uncertainty around supply disruptions.

• Zijin-H/A (2899.HK/601899.SS)

  Growth-oriented copper, gold and lithium miner, Buy/Buy maintained.

  Strengths

  2026E guidance shows gold output up 17% year-on-year to 105t and copper output up 10% year-on-year to 1.2mnt; Goldman expects recurring profit to rise 55% year-on-year in 2026E.

  Weaknesses

  Higher realization prices in 2025A were offset by higher copper unit costs, SG&A and income taxes.

  Comparison

  If 2028E targets are achieved, current Zijin-H stock price implies copper at US$9,893/t, around 19% below spot US$12,288/t.

  Risks

  Falling metal prices, costs above expectations, execution risk for projects, and uncertainty around Chifeng Gold deal approval and settlement.

• CMOC-H/A (3993.HK/603993.SS)

  Global large copper-cobalt producer, Buy/Buy maintained.

  Strengths

  2026E copper output guidance is 760-820kt, and KFM Phase 2 is expected to lift output after completion in 1H27E; recovered cobalt sales and stronger minor-metal prices support profits.

  Weaknesses

  2025A recurring profit was below expectations, mainly due to lower realized copper prices and higher unit costs in DRC.

  Comparison

  If 2028E targets are achieved, current CMOC-H stock price implies copper at US$7,107/t, 42% below spot US$12,288/t.

  Risks

  DRC operating costs, copper and cobalt price volatility, capex for expansion, and execution risks at Brazil gold acquisition and Lumina Gold projects.

• Jiangxi Copper-H/A (0358.HK/600362.SS)

  Large Chinese copper producer, Buy/Buy maintained.

  Strengths

  Self-owned ore concentrate provides profit leverage and is less affected by weak refining TCRC performance; 2026E recurring net profit expected to grow 84% year-on-year.

  Weaknesses

  2025A recurring profit missed expectations, and Goldman cut 2026-27E profit forecasts by 5%-9%.

  Comparison

  H-share 2026E PE is about 8x, within the historical range of 5-10x and attractive.

  Risks

  Declining copper prices, hedging losses or fair-value losses in refining, and uncertainty around Solgold Cascabel development plans and capex.

• MMG (1208.HK)

  Pure copper exposure name, Buy maintained.

  Strengths

  2025A recurring profit was broadly in line with expectations; 2026E recurring profit is expected to double to US$1.75bn and could resume its first dividend in 10 years from 2026E.

  Weaknesses

  In 2025A, Kinsevere wrote down US$290mn of assets and no terminal dividend is expected.

  Comparison

  Compared with diversified miners, MMG benefits more directly from copper prices and deleveraging.

  Risks

  Las Bambas cost and operating execution, Khoemacau expansion progress, copper price volatility, and capex pressure.

• Zhaojin (1818.HK)

  Large Chinese gold miner, Buy maintained.

  Strengths

  2025A recurring net profit was above expectations, and Haiyu startup in 2026E with full ramp to 2028E is expected to deliver meaningful incremental profits.

  Weaknesses

  2026-27E profit forecasts were reduced by 4%-5% due to low in-house mine gold output, and 2025A payout ratio fell to 10%.

  Comparison

  Goldman expects recurring net profit to rise from Rmb3.7bn in 2025A to Rmb6.5bn in 2028E, a CAGR of 21%.

  Risks

  Gold price volatility, Haiyu startup and ramp-up pace, lower-than-expected in-house mine output, and M&A-related capex.

Key data

• CoverageAluminium, copper and gold, 11 covered stocksThe coverage includes Chalco-H/A, Hongqiao, Zijin-H/A, CMOC-H/A, Jiangxi Copper-H/A, MMG and Zhaojin.
• 2026E recurring profit growth outlook42%-114% year-on-year growthGoldman expects most base metals and gold companies to be supported by rising metal and gold prices and output growth at some names.
• Aluminium spread assumption1H26E Rmb8,900/t; 2H26E Rmb6,500/t; 2027E Rmb4,250/t6%-32% above prior forecasts, with spot around Rmb9,000/t.
• Chalco rating and target priceNeutral/Neutral; HK$12.5/Rmb12.5Upgraded from Sell/Sell; prior target was HK$9.0/Rmb9.1.
• Hongqiao target priceHK$34.0Neutral is maintained; prior target was HK$28.0, with the dividend yield still attractive but limited upside.
• Zijin 2026E profit outlookRecurring profit expected to grow 55% year-on-year to Rmb78.9bnDriven by higher gold and copper prices and 7%-12% year-on-year growth in gold and copper output.
• CMOC 2026E profit outlookRecurring profit expected to grow 82% year-on-yearDrivers include higher copper prices, cobalt sales recovery, and stronger prices for byproduct metals such as tungsten, molybdenum and cobalt.
• Jiangxi Copper 2026E profit outlookRecurring net profit expected to grow 84% year-on-yearMainly driven by higher copper prices and improved profit contribution from joint-venture and associate subsidiaries.
• MMG 2026E profit outlookRecurring profit expected to rise from US$0.82bn to US$1.75bnHigher copper prices and lower financing costs from deleveraging are the main drivers.
• Zhaojin long-term growthRmb3.7bn in 2025A to Rmb6.5bn in 2028E, CAGR 21%Primarily relies on Haiyu mine startup in 2026E and reaching full capacity in 2028E.

Impact & implications

For portfolio positioning, the implication is that copper and gold-related stocks remain the more constructive area due to rising prices, output growth and valuation appeal, while the aluminium segment, though seeing upward 2026E profit revisions, is more neutral because current stock prices already reflect much of the high aluminium spread and medium-term new supply may compress spreads. The upgrade to Chalco reflects a shift from a relatively negative risk-reward profile to a balanced one rather than a strong bullish shift.

Risks

• Metal and gold prices below expectations would weaken revenue, profits and valuation leverage.
• Faster-than-expected new supply expansion in aluminium or unexpected secondary aluminium supply could cause aluminium spreads to normalize more quickly.
• If Middle East smelter disruptions worsen, aluminium spreads may rise and change profit dispersion across the industry.
• Delayed realization of mine expansions, start-ups or M&A approvals for copper, cobalt and gold projects could postpone output and profit delivery.
• Rising costs, unit COGS above expectations, and changes in tax rates or financing costs may compress profits.
• High capital expenditure may pressure free cash flow, leverage and shareholder returns.
• Policy changes, including primary aluminium cap adjustments, antitrust approvals, cross-border M&A regulation and host-country mining regulation, could affect project execution.

What to watch

• Whether SHFE aluminium spreads normalize as Goldman assumes across 1H26E, 2H26E and 2027E.
• Whether Middle East aluminium smelter disruptions intensify and how reactivation of China's dormant capacity indicators affects supply growth.
• Whether Zijin's Chifeng Gold deal can meet settlement conditions by September 30, 2026.
• Construction, output and capex timing of CMOC KFM Phase 2, Brazil gold acquisition and Lumina Gold projects.
• Jiangxi Copper's updated feasibility study and development plan for the Solgold Cascabel project.
• MMG Las Bambas cost, Khoemacau Phase 2 construction progress and the likelihood of dividend resumption in 2026E.
• Whether Zhaojin Haiyu mine starts in 2026E and ramps to 15t gold output by 2028E as expected.
• The spot trajectories of copper, gold, cobalt, molybdenum and tungsten prices versus Goldman model assumptions.