Zijin Mining 1Q26 earnings in line, with volume growth and cost control supporting further growth
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Zijin Mining 1Q26 earnings in line, with volume growth and cost control supporting further growth
J.P. Morgan believes Zijin Mining still delivered Rmb20bn in profit in 1Q26 before production was fully released, with copper and gold prices, ramp-up at low-cost mines, and deleveraging jointly reinforcing FY26 growth visibility.
- 1Q26 attributable net profit was Rmb20.079bn, up 98% YoY and 44% QoQ, broadly in line with J.P. Morgan expectations, and reaching 24%/25% of JPMe/BBGe FY26 forecasts.
- Mined gold and mined copper contributed about 48% and 35% of total gross profit, respectively, benefiting from higher gold and copper prices as well as increased contribution from low-cost mines.
- 1Q26 operating cash flow was Rmb27.832bn, free cash flow was Rmb21.998bn, and net gearing fell 9.3 percentage points QoQ to 31%.
- Although copper and gold output each achieved only about 22% of FY26 guidance, the report expects a more visible production release from 2Q onward as lithium mines and other projects ramp up.
Report interpretation
Overview
This report is J.P. Morgan's initiation on Zijin Mining's 1Q26 results. The report believes that the company still delivered earnings in line with expectations despite production progress running below the linear quarterly level of 25%, indicating stronger-than-expected price realization and cost efficiency. The report remains positive on the outlook for copper and gold prices and lists Zijin Mining A/H and Zijin Gold as sector top picks.
Core views
The core views are: first, 1Q26 earnings quality was strong, with core net profit of Rmb18.459bn, up 87% YoY; second, unit gross profit for mined gold and mined copper reached Rmb782/g and Rmb56,649/t, respectively, driven by rising prices and cost control; third, the near-term slower production progress was mainly due to reduced output at Kamoa-Kakula, while other mines generally progressed as planned; fourth, as copper, gold, and lithium projects ramp up in subsequent quarters, there is room for upward revisions to earnings consensus.
Analysis framework
The report evaluates Zijin Mining across multiple dimensions including earnings breakdown, production and sales volumes, unit selling prices, unit costs, gross profit contribution, cash flow, balance sheet, and valuation methodology, and separately provides target prices and risk assessments for A-shares, H-shares, and Zijin Gold International - H.
Methodology notes
Discounted cash flow valuation
Zijin Mining A-share Dec-26 target price of Rmb50 is based on DCF valuation, using 11% WACC and 2.5% terminal growth, corresponding to FY26E 16x P/E and 10x EV/EBITDA.
A/H share premium mapping
Zijin Mining H-share Dec-26 target price of HK$55 is based on a 3% three-month average A/H premium relative to the A-share target price, corresponding to FY26E 15x P/E and 9x EV/EBITDA.
Sum-of-the-parts valuation
The HK$240 target price for Zijin Gold International - H is based on the SOTP method, using an equal-weight combination of 50% NPV and 50% rolling 12-month target 20x P/E, with a 7% WACC for the NPV portion.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Zijin Mining A-share 601899.SSCore covered name
- Strengths
- Earnings in line with expectations, benefiting from copper and gold prices, improved cost control, lower net gearing, target price Rmb50.00.
- Weaknesses
- 1Q26 copper and gold production completion was only about 22%, and some projects are still in the ramp-up stage.
- Comparison
- The report says Zijin Mining A/H and Zijin Gold are sector top picks, with Zijin Mining A-share valuation based on DCF.
- Risks
- Risk of missing copper production guidance, geopolitical risks at overseas mines, weaker-than-expected gold and copper prices, delayed or incomplete acquisitions.
- Zijin Mining H-share 2899.HKH-share mapping of the same company
- Strengths
- Overweight rating, target price HK$55.00, benefiting from the same earnings growth and price cycle as the A-shares.
- Weaknesses
- H-share target price is affected by the A/H premium assumption.
- Comparison
- The target price is based on the A-share target price and a 3% three-month average A/H premium.
- Risks
- Similar to A-shares, while also affected by Hong Kong market liquidity and changes in valuation discount/premium.
- Zijin Gold International - H 2259.HKZijin Mining subsidiary and gold growth platform
- Strengths
- Nine mines across four continents, 2023-2025 gold production CAGR of 15%, and the report forecasts 2025-2028 earnings CAGR of 64%.
- Weaknesses
- AISC rose to US$1,638/oz, affected by higher royalty tax.
- Comparison
- Valuation uses SOTP, with the HK$240 target price corresponding to FY26E/FY27E 18x/13x P/E.
- Risks
- Gold price volatility, operating risks in overseas jurisdictions, project construction delays, illegal mining at the Buriticá gold mine, delayed or incomplete Allied Gold acquisition, and selling pressure after IPO lock-up expiry.
Key data
- 1Q26 attributable net profitRmb20.079bnYoY +98%, QoQ +44%, broadly in line with JPMe Rmb20bn.
- 1Q26 core earningsRmb18.459bnYoY +87%, QoQ +11%.
- Mined gold sales volume22.154tQoQ -3%; unit gross profit Rmb782/g, YoY +100%, QoQ +23%.
- Mined copper sales volume222.758ktBasically flat versus 4Q25; unit gross profit Rmb56,649/t, YoY +49%, QoQ +24%.
- 1Q26 operating cash flowRmb27.832bnYoY +122%, QoQ +19%.
- 1Q26 free cash flowRmb21.998bnYoY +196%, QoQ +47%.
- Net gearing31%Down 9.3 percentage points from 4Q25.
- Zijin Gold 1Q26 earningsUS$807mnYoY +385%, QoQ +16%, about 22% of BBGe FY26 forecast.
Impact & implications
The report expects consensus earnings for Zijin Mining to be revised upward, because the company still delivered results in line with expectations despite production progress being below 25% of full-year guidance, showing strong elasticity on both price and cost. Near-term share price reaction is expected to be positive, while the medium-term outlook depends on production releases in the remaining quarters, the sustainability of copper and gold prices, and the completion of acquisitions.
Risks
- Reduced output at Kamoa-Kakula creates risk of missing FY26 copper production guidance.
- Overseas mines face geopolitical, regulatory, tax, and operational risks.
- If gold and copper prices are weaker than expected, earnings and valuation elasticity will be compressed.
- If Allied Gold or Chifeng-related acquisitions are delayed or not completed, production and earnings forecasts may be dragged down.
- If acquisition prices are higher than eventual returns, capital efficiency may be impaired.
- Higher overseas royalty taxes have already pushed up the sales tax rate, and this remains to be monitored.
What to watch
- Whether mined copper, mined gold, and lithium output ramp-up materializes in 2Q26 and subsequent quarters.
- Progress of Kamoa-Kakula full-year production guidance and actual output.
- Commissioning progress of the Tres Quebradas Salar, Lakkor Tso Salar, Xiangyuan hard-rock lithium mine, and Manono Northeast project.
- Whether gold and copper prices and unit costs continue to improve.
- Timing of Allied Gold acquisition completion and its contribution to Zijin Gold 2H26 output.
- Impact of changes in sales tax and overseas royalty tax on margins.