Zijin Mining's 2026H1 profit forecast missed expectations, but UBS maintains a Buy rating

Overview

This report is a UBS rapid earnings review of Zijin Mining (2899.HK). The company released 2026H1 profit guidance, projecting RMB390bn, up 68% year-on-year, but implied Q2 profit is RMB19bn, down 5% month-on-month, below UBS and market consensus of RMB20-21bn. The report also discloses that Zijin Mining is a diversified Chinese mining company primarily engaged in exploration, mining, smelting and distribution of gold, copper, zinc and other metallic minerals, and is listed in both Hong Kong and Shanghai.

Core views

UBS's core view is that short-term earnings were below expectations, mainly dragged down by gold cost inflation and weak Q2 performance of gold equity investments; however, UBS maintains a Buy rating over the medium to long term with a target price of HK$62.00, indicating it still sees substantial upside versus the current share price. On H1 production progress, mineral gold and mineral copper were both around 45% of full-year guidance and LCE about 36%, leaving room for monitoring on subsequent delivery and cost control.

Analysis framework

The report evaluates Zijin Mining by splitting earnings guidance, conducting quarter-on-quarter comparisons, tracking production completion ratios, and using a valuation target-price framework. UBS breaks down 2026H1 forecasted profit into implied Q2 profit, compares it with UBS and market consensus expectations, and combines this with the completion ratios of mineral gold, mineral copper and LCE versus full-year guidance to explain why earnings were below expectations.

Methodology notes

• Valuation methodsSOTP multiple

  sum-of-the-parts valuation

  UBS says its target price for Zijin Mining H shares is based on an SOTP multiple approach, deriving a target by valuing and aggregating different business or asset segments.

• earnings_reviewprofit alert decomposition

  earnings guidance decomposition

  The report breaks down the projected 2026H1 profit of RMB390bn into implied Q2 profit of about RMB190bn, and compares it with UBS and market expectations of RMB200-210bn to assess the magnitude of the shortfall.

Asset mapping & comparison

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

• Zijin Mining H-share 2899.HK

  Core coverage name

  Strengths

  Diversified mining asset base covering gold, copper, zinc and other metallic minerals; listed in both H shares and A shares; UBS target price implies substantial upside versus the current price.

  Weaknesses

  Q2 2026 profit was below UBS and market expectations, with higher gold costs and investment losses weighing on current performance.

  Comparison

  Implied Q2 profit is RMB190bn, below UBS and market expectations of RMB200-210bn; UBS 2026E EPS forecast is RMB3.45, above the consensus estimate of RMB3.07.

  Risks

  Commodity price volatility, overseas geopolitical risk, new mine ramp-up pace, foreign exchange risk, and production disruptions.

• Gold segment

  Key earnings driver and source of cost pressure

  Strengths

  H1 mineral gold was 47 tonnes, about 45% of full-year guidance.

  Weaknesses

  The report states that gold cost inflation was one of the main factors behind weaker Q2 profit.

  Comparison

  Completion of mineral gold is similar to mineral copper, both around 45% of full-year guidance.

  Risks

  Gold price volatility, continued rise in gold costs, and underperformance of gold equity assets.

• Copper segment

  Important commodity exposure

  Strengths

  H1 mineral copper was 534k tonnes, about 45% of full-year guidance.

  Weaknesses

  Demand in the copper chain is influenced by downstream sectors such as real estate and construction, power grid and equipment, appliances, machinery and transportation.

  Comparison

  Copper production completion is broadly in line with mineral gold and above LCE’s 36%.

  Risks

  Copper price volatility, regulatory changes, production interruptions, and weaker downstream demand.

Key data

• 2026H1 earnings guidanceRMB390bnUp 68% year-on-year.
• Implied Q2 profit in 2026RMB190bnDown 5% quarter-on-quarter, below UBS and market expectations of RMB200-210bn.
• H1 mineral gold production47 tonnesAbout 45% of the full-year guidance.
• H1 mineral copper production534k tonnesAbout 45% of the full-year guidance.
• H1 LCE production43k tonnesAbout 36% of the full-year guidance.
• 12-month ratingBuyThe 12-month rating provided by UBS.
• 12-month target priceHK$62.00Based on the SOTP multiple approach.
• Current priceHK$29.42Price date: 9 July 2026.
• Forecast price appreciation110.7%Forecast price appreciation disclosed in the report table.
• Forecast dividend yield5.0%Forecast dividend yield disclosed in the report table.
• Forecast total stock return115.8%Forecast stock return disclosed in the report table.
• 2026E EPSRMB3.45UBS forecast; consensus estimate is RMB3.07.

Impact & implications

The earnings guidance miss may pressure short-term sentiment, especially as investors will watch whether gold cost inflation and losses on gold equity investments are persistent. Nonetheless, UBS still maintains a Buy rating and a high target price, signaling it places greater weight on Zijin Mining’s medium- to long-term asset value in gold and copper, production expansion, and potential returns. For investors, the key debate is whether near-term profit volatility will affect full-year earnings delivery, and whether the cost pressures and investment losses are merely temporary.

Risks

• Commodity price volatility, especially movements in gold and copper prices.
• Ongoing gold cost inflation may continue to pressure margins.
• Investment losses from poor performance of gold equity assets in Q2 may affect earnings volatility.
• Overseas geopolitical risk may affect overseas mining operations.
• The ramp-up of new mines may be faster or slower than expected.
• Foreign exchange risk may affect earnings translation and asset values.
• Regulatory changes, production interruptions, and demand risks from downstream sectors including real estate construction, power grids and equipment, appliances, machinery, and transportation.

What to watch

• Detailed disclosure of Q2 earnings, costs and investment losses in the upcoming full H1 report.
• Progress in completing full-year guidance for mineral gold, mineral copper and LCE.
• Whether gold cost inflation eases and whether performance of gold equity assets recovers.
• Copper and gold price movements and their sensitivity to earnings forecasts.
• Progress of new mine ramp-up and changes in overseas geopolitical risk.
• Whether the gap between UBS 2026E-2028E EPS forecasts and consensus expectations narrows.