Earnings were slightly below expectations, but J.P. Morgan maintains Zijin Mining as top pick

Overview

This report is J.P. Morgan's First Take on the 1H26 earnings outlook for Zijin Mining and Zijin Gold International. The report suggests that both companies' 2Q26 profits were slightly below expectations, due to month-on-month weakening in gold prices, slower-than-expected release of gold and copper output, below 50% completion of full-year production targets, and higher-than-expected cost pressure at Zijin Gold. Although short-term earnings and stock reaction may be pressured, J.P. Morgan still maintains Zijin Mining as top pick and keeps the related names rated Overweight.

Core views

The core views are: first, Zijin Mining's 1H26 earnings completion was close to but slightly below J.P. Morgan expectations, with 2Q26 earnings below expectations; second, Zijin Gold's 2Q26 earnings were more significantly below expectations, with cost inflation and gold price pressure being the main headwinds; third, gold and copper production in 1H26 did not reach 50% of annual plans, but J.P. Morgan expects the major ramp-up to be concentrated in 2H26; fourth, medium-term gold and copper fundamentals remain positive, and mine expansion and cost-control track record support Zijin Mining's target of over 10% production CAGR by 2028; fifth, Zijin Gold's M&A and resource base expansion form a growth platform, but the progress of the Allied Gold acquisition and overseas operating risks still need monitoring.

Analysis framework

The report combines earnings forecast decomposition, production completion monitoring, commodity price changes, cost-pressure assessment, and DCF valuation. Short-term analysis focuses on the completion of implied and actual 2Q26 and 1H26 earnings against JPMe and BBGe full-year expectations; medium-term valuation tests the reasonableness of the target price through DCF, WACC, terminal growth rate, and implied FY27E P/E and EV/EBITDA multiples.

Methodology notes

• Earnings forecast decompositionFirst Take earnings alert review

  Reverse-engineer company earnings forecasts to derive 2Q26 and 1H26 profits, and compare completion versus JPMe, BBGe, and full-year expectations.

  For Zijin Mining and Zijin Gold, earnings below expectations are assessed through quarterly implied profit, year-over-year and month-on-month growth, and full-year estimate completion percentages.

• Valuation methodsDCF

  Use discounted cash flow valuation to determine the Dec-27 target price.

  Zijin Mining A-share target of Rmb46 is based on 13% WACC and 2% terminal growth rate; Zijin Gold target of HK$170 is based on 8.5% WACC and 2.5% terminal growth rate.

• Relative valuationA/H premium mapping

  Derive H-share target price using the A-share target and A/H premium.

  Zijin Mining H-share Dec-27 target of HK$50 is based on the A-share target and a 6% average three-month A/H premium.

Asset mapping & comparison

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

• Zijin Mining A-share (601899.SS / 601899 CH)

  Core covered name in the report, rating remains Overweight, and the company is J.P. Morgan's top pick.

  Strengths

  Copper and gold contribute strongly, accounting for 36% and 43% of company gross profit in 2025 respectively; mine expansion and cost-control track record is relatively good, with a target to achieve over 10% production CAGR by 2028.

  Weaknesses

  1H26 gold and copper production completion rates were below 50%, and 2Q26 earnings were below expectations.

  Comparison

  A-share Dec-27 target price of Rmb46, corresponding to FY27E P/E of 13x and FY27E EV/EBITDA of 8x.

  Risks

  Excessive acquisition payment, geopolitical risk in overseas mines, gold and copper prices weaker than expected, and delay or non-completion of Allied Gold or Chifeng acquisition.

• Zijin Mining H-share (2899.HK / 2899 HK)

  H-share proxy for Zijin Mining, rating remains Overweight.

  Strengths

  Benefits from the same gold and copper exposure as the A-share and the production ramp-up thesis.

  Weaknesses

  Short-term impact is also affected by slightly below-expected earnings, commodity price pressure, and insufficient production completion.

  Comparison

  H-share Dec-27 target price of HK$50, derived from the A-share target and 6% average three-month A/H premium, implying FY27E P/E of 12x and FY27E EV/EBITDA of 7x.

  Risks

  Changes in A/H premium, commodity price volatility, overseas project risk, and uncertain acquisition progress.

• Zijin Gold International H-share (2259.HK / 2259 HK)

  Subsidiary of Zijin Mining, rating remains Overweight.

  Strengths

  Built a growth platform through M&A and reserve expansion, with gold production CAGR of 15% from 2023 to 2025; if the Allied Gold acquisition closes in 3Q26 and starts contributing from 4Q26, the 2026 gold production assumption could reach 60t.

  Weaknesses

  2Q26 earnings were clearly below JPMe, costs were higher than expected, and 1H26 mined gold production completion rate was below 50%.

  Comparison

  Dec-27 target price of HK$170 based on DCF valuation, implying FY27E P/E of 13x and FY27E EV/EBITDA of 8.5x.

  Risks

  Gold price volatility, multi-jurisdictional and overseas operational risks, project implementation delays, illegal mining activity at Colombia's Buriticá mine, realized prices below expectations, and Allied Gold acquisition delay or non-completion.

Key data

• Zijin Mining 2Q26 reported profitRmb19.0bnMonth-on-month -5%, year-on-year +45%, below JPMe.
• Zijin Mining 2Q26 core profitRmb19.4bnMonth-on-month +5%, year-on-year +66%, below JPMe Rmb21.5bn.
• Zijin Mining 1H26 reported/core profitRmb39.1bn / Rmb37.9bnApproximately 49%/48% of JPMe/BBGe FY26 expectations.
• Zijin Gold 2Q26 implied profitabout USD590mnMonth-on-month -27%, year-on-year +67%, below JPMe USD830mn.
• Zijin Gold 1H26 profitabout USD1.4bnYear-on-year +169%, about 42%/41% of JPMe/BBGe FY26 expectations.
• Zijin Mining 1H26 productionGold 47t; copper 534kt; lithium 43ktApproximately 42%/45%, 48%/45%, 35%/36% of JPMe/company guidance respectively.
• Zijin Gold 1H26 gold productionabout 27tAbout 45%/46% of JPMe/company guidance.
• Zijin Mining A-share target priceRmb46.00Dec-27 target price, rating Overweight.
• Zijin Mining H-share target priceHK$50.00Dec-27 target price, rating Overweight.
• Zijin Gold International H-share target priceHK$170.00Dec-27 target price, rating Overweight.

Impact & implications

Short-term impact is cautious: earnings below expectations may lead to downward revisions to Zijin Gold earnings estimates, and consensus earnings for Zijin Mining are expected to remain relatively muted, with stock reaction potentially neutral to negative. The medium-term implication remains constructive: if 2H26 production ramp-up is delivered and copper and gold prices stabilize or strengthen, the growth and valuation support for Zijin Mining and Zijin Gold remains intact.

Risks

• Gold and copper prices weaker than expected.
• Gold and copper production ramp-up slower than expected, with insufficient completion of full-year production targets.
• Zijin Gold cost inflation higher than expected, including diesel and royalty costs.
• Geopolitical and multi-jurisdiction operational risks in overseas mines.
• Delay or non-completion of Allied Gold or Chifeng acquisition, or lower-than-expected acquisition returns.
• Volatility in commodity prices and risk appetite driven by changes in U.S.-Iran negotiations, interest-rate policy, and higher-rate expectations.

What to watch

• Whether 2H26 gold, copper, and lithium production ramp-up accelerates.
• Further guidance from management on 2H26 cost trends for 2026.
• Gold and copper price moves, especially the impact of rate expectation changes on gold prices.
• Whether the Allied Gold acquisition is completed in 3Q26 and starts contributing from 4Q26.
• Whether market consensus earnings are revised down, especially for Zijin Gold.
• Short-term stock reaction of Zijin Mining A/H shares and Zijin Gold to the earnings outlook.