2Q26 slightly missed, but JPMorgan maintains Zijin Mining as top pick

Overview

This report is JPMorgan's initial update on Zijin Mining and Zijin Gold International 1H26 earnings guidance. The report argues that the 2Q26 miss was mainly driven by sequential weakness in gold prices, slower ramp of gold and copper output versus full-year trajectory, and more pronounced cost inflation. Although the short-term market reaction may be muted to negative, JPMorgan still maintains Zijin Mining as a top pick and keeps an Overweight rating on the related names.

Core views

Key views include: first, Zijin Mining's 1H26 reported/core earnings represented about 49%/48% of JPMorgan’s full-year forecasts, slightly below expectations; second, Zijin Gold 1H26 earnings were about 42% of full-year forecasts, with a more pronounced miss versus JPMorgan in 2Q26; third, the completion rates for gold, copper, and lithium output were about 42%/45%, 48%/45% and 35%/36%, showing production progress for the main commodities is not yet past halfway; fourth, the broker expects most of the ramp-up to be concentrated in 2H26, so it maintains a constructive medium-term view.

Analysis framework

The report applies earnings warning decomposition, output progress comparison, commodity-price and cost factor analysis, and combines DCF valuation and implied multiple checks from target prices to assess investment attractiveness. It uses WACC of 13% and terminal growth rate of 2% for DCF valuation on Zijin Mining A-shares; for Zijin Gold it uses WACC of 8.5% and terminal growth rate of 2.5%.

Methodology notes

• Valuation methodDCF

  Discounted cash flow valuation

  Zijin Mining A-shares target price of Rmb46 is based on DCF, assuming a WACC of 13% and terminal growth rate of 2%; Zijin Gold target price of HK$170 is based on DCF, assuming a WACC of 8.5% and terminal growth rate of 2.5%.

• Earnings trackingProduction completion-rate comparison

  Compare 1H26 output with JPMorgan and company full-year guidance

  The report compares output for gold, copper, lithium, and dore gold against full-year forecasts/guidance to assess reasons for the earnings miss, with emphasis on whether it is below the 50% mid-year progress line.

• Relative valuationImplied P/E and EV/EBITDA

  Validation via multiples implied by target prices

  Zijin Mining A-share target price implies FY27E P/E of 13x and EV/EBITDA of 8x; H-share target price implies FY27E P/E of 12x and EV/EBITDA of 7x; Zijin Gold target price implies FY27E P/E of 13x and EV/EBITDA of 8.5x.

Asset mapping & comparison

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

• Zijin Mining - A (601899.SS)

  Covered name, Overweight rating

  Strengths

  High contributions from copper and gold, which accounted for 36% and 43% of company gross profit in 2025, respectively; a relatively good record in mine expansion and cost control; target is to achieve over 10% CAGR in output by 2028.

  Weaknesses

  1H26 gold and copper production progress was below the half-year pace, and earnings are sensitive to commodity prices and overseas project execution.

  Comparison

  Target price of Rmb46 implies FY27E P/E 13x and FY27E EV/EBITDA 8x.

  Risks

  Excessive M&A payment levels, geopolitical risks at overseas mines, weaker-than-expected gold and copper prices, delays or non-completion of Allied Gold or Chifeng acquisition.

• Zijin Mining - H (2899.HK)

  Covered name, Overweight rating

  Strengths

  Shares Zijin Mining’s fundamentals with A-shares and provides a Hong Kong listed trading vehicle through the H-share market.

  Weaknesses

  Potential short-term earnings miss and weaker-than-expected consensus earnings in the near term.

  Comparison

  Target price of HK$50 is based on the A-share target price and a 3-month average A/H premium of 6%, implying FY27E P/E 12x and EV/EBITDA 7x.

  Risks

  Declining gold and copper prices, delays in production ramp-up, and overseas M&A and project execution risks.

• Zijin Gold International - H (2259.HK)

  Zijin Mining subsidiary, covered name, Overweight rating

  Strengths

  Built a growth platform through acquisitions and reserve expansion, with gold output CAGR of 15% from 2023 to 2025; operates nine mines across four continents; report forecasts earnings CAGR of 42% from 2025 to 2028.

  Weaknesses

  2Q26 earnings were clearly below JPMorgan, with pronounced pressure from cost inflation, diesel, and royalty costs.

  Comparison

  Target price of HK$170 is based on DCF, implying FY27E P/E 13x and EV/EBITDA 8.5x.

  Risks

  Gold price volatility, multi-jurisdiction operating risk, project execution delays, illegal mining activity at Colombia Buriticá mine, weaker-than-expected realized pricing, and delayed or non-completed Allied Gold acquisition.

Key data

• Zijin Mining 2Q26 reported profitRmb19.0bnMoM -5%, YoY +45%, below JPMorgan’s Rmb21.5bn.
• Zijin Mining 2Q26 core profitRmb19.4bnMoM +5%, YoY +66%.
• Zijin Mining 1H26 reported/core profitRmb39.1bn / Rmb37.9bnTogether accounting for about 49%/48% of JPMorgan/BBGe FY26 forecasts.
• Zijin Gold 2Q26 profitabout USD590mnMoM -27%, YoY +67%, below JPMorgan’s USD830mn.
• Zijin Gold 1H26 profitabout USD1.4bnYoY +169%, about 42%/41% of JPMorgan/BBGe FY26 forecasts.
• Zijin Mining 1H26 gold production47tabout 42%/45% of FY JPMorgan/company guidance.
• Zijin Mining 1H26 copper production534ktabout 48%/45% of FY JPMorgan/company guidance.
• Zijin Mining 1H26 lithium production43ktabout 35%/36% of FY JPMorgan/company guidance, with Manono expected to contribute more clearly in 2H26.
• Zijin Gold 1H26 dore gold productionabout 27tabout 45%/46% of FY JPMorgan/company guidance.
• 2Q26 gold/copper pricesRmb992/g / Rmb103k/tGold MoM -9%, copper MoM +2%.
• Zijin Mining H-share target priceHK$50.00Based on A-share target price and 3-month average A/H premium of 6%.
• Zijin Gold target priceHK$170.00Based on DCF valuation, WACC 8.5%, terminal growth rate 2.5%.

Impact & implications

In the short term, the earnings miss may lead to a muted-to-negative stock reaction for Zijin Mining and Zijin Gold, with the market potentially cutting Zijin Gold earnings expectations. Over the medium term, if 2H26 production ramp is delivered and combined with JPMorgan’s constructive view on medium-term copper and gold supply-demand and prices, Zijin Mining still has the foundation to remain a top pick.

Risks

• Gold and copper prices are weaker than expected.
• Gold and copper production releases are slower than expected, and 2H26 production ramp may not materialize.
• Zijin Gold cost inflation is higher than expected, including pressure from diesel and royalty costs.
• Overseas mines face geopolitical and multi-jurisdiction operating risks.
• Allied Gold and/or Chifeng-related acquisitions are delayed or not completed, impacting production and earnings forecasts.
• M&A purchase price is relatively high versus eventual returns.
• Illegal mining activity and operation risks exist at Colombia’s Buriticá gold mine.

What to watch

• Ramp-up progress of 2H26 gold, copper, lithium, and dore gold production.
• Gold price trends, changes in rate expectations, and geopolitical uncertainty.
• Whether tighter copper supply-demand conditions will drive another upcycle in copper prices.
• Subsequent commentary from Zijin Gold management on 2026 cost trajectory.
• Whether Allied Gold acquisition is completed in 3Q26 and contributes production in 4Q26.
• How the market adjusts earnings forecasts for Zijin Gold and Zijin Mining.
• Impact of US-Iran talks and major rate decisions on precious metal prices.