CMOC Group's 2Q26 performance was in line with expectations, while quarterly copper output reached a record high

Overview

This report reviews CMOC Group Ltd's (03993.HK) 2Q26 earnings preview from Morgan Stanley. The report considers the company's 2Q26 performance broadly in line with expectations, with the investment view unchanged. The most notable operating signal was quarterly copper output of 200kt, a record high.

Core views

Morgan Stanley maintains a positive view: 1H26 profit grew significantly year over year, mainly benefiting from copper prices, copper output, tungsten and molybdenum prices, and the consolidation of the gold business; implied 2Q26 profit was in line with expectations; and copper output reached approximately 49% of the full-year guidance, indicating a steady operating pace.

Analysis framework

The report compares the company's forecast net profit, recurring net profit, sequential quarterly performance, and copper output with Morgan Stanley's expectations and the company's full-year guidance, while explaining earnings changes through commodity prices, production volumes, and consolidation factors. Valuation uses a DCF model, with the A-share target price derived by reference to the H-share target price.

Methodology notes

• Valuation methodologyDCF

  Discounted cash flow valuation

  Morgan Stanley uses a DCF model, assuming a WACC of 10.7% and a 2% annual revenue growth rate beyond the explicit forecast period.

• Relative pricingA/H premium adjustment

  A-share target price conversion

  The A-share target price is based on the H-share target price, applying a 6% A/H premium and a 0.88 HKD/RMB exchange rate adjustment.

• Research frameworkMorgan Stanley ModelWare

  Morgan Stanley's internal forecasting framework

  Unless otherwise specified, the financial metrics in the report are based on the Morgan Stanley ModelWare framework.

Asset mapping & comparison

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

• CMOC Group Ltd (03993.HK)

  Primary covered company, H-share

  Strengths

  Overweight rating, Attractive industry view, 76% upside from the closing price to the target price, and record quarterly copper output in 2Q26.

  Weaknesses

  Performance was in line with expectations rather than above expectations, and the share price remains exposed to the metal price cycle.

  Comparison

  Relative to the average return expectations for Morgan Stanley's covered industry, Overweight represents an expectation that risk-adjusted total returns will outperform the coverage group's average over the next 12-18 months.

  Risks

  Fluctuations in the prices and output of copper, cobalt, gold, tungsten, and other metals may affect earnings and valuation.

• CMOC Group Ltd (603993.SS)

  A-share mapping of the same company

  Strengths

  The A-share target price is derived from the H-share valuation, incorporating an A/H premium and exchange rate adjustment.

  Weaknesses

  The A/H premium and exchange rate assumptions create valuation sensitivity.

  Comparison

  A-share pricing references the H-share target price, a 6% A/H premium, and a 0.88 HKD/RMB exchange rate.

  Risks

  Changes in the A/H price gap, exchange rates, and mainland market risk appetite may affect A-share performance.

Key data

• 1H26 forecast net profitRmb15.5-16.5bnUp 79-90% year over year.
• Implied 2Q26 net profitRmb7.7-8.7bn1Q26 was Rmb7.8bn; the midpoint was in line with Morgan Stanley's expectations.
• 1H26 recurring net profitRmb15-16bnUp 72-83% year over year.
• 1H26 copper output388ktUp 9.7% year over year, representing approximately 49% of the 2026 full-year guidance.
• 2Q26 copper output200ktUp 6% sequentially and 9% year over year, representing the highest quarterly output on record.
• Target priceHK$26.30Against a closing price of HK$14.95, implying 76% upside.
• 2026e EPSRmb1.46Morgan Stanley's forecast disclosed in the table.
• 2026e EBITDARmb65,031mnMorgan Stanley's forecast disclosed in the table.

Impact & implications

The impact on the investment view is “Unchanged,” while performance relative to expectations is “In-line.” Supported by record copper output, strong year-over-year profit growth, and commodity prices, CMOC Group remains viewed as a positive allocation within the Greater China materials sector.

Risks

• Prices of copper, gold, cobalt, tungsten, and other metals fall below expectations.
• Copper output falls materially below the company's guidance.
• Weak industrial and domestic electric vehicle demand causes cobalt prices to weaken.
• A slow global macroeconomic recovery causes prices of other metals to rise more slowly than expected.
• The research institution discloses an existing or potential investment banking and other services relationship with CMOC Group Ltd; investors should be aware of potential conflicts of interest.

What to watch

• Whether copper output can continue to meet the full-year guidance in the second half of 2026.
• Trends in copper, gold, cobalt, tungsten, and molybdenum prices.
• The sustainability of the gold business's profit contribution after consolidation.
• The final outcome of formal 2Q26 results relative to the forecast range.
• Changes in the H-share target price, A/H premium, and HKD/RMB exchange rate assumptions.