[ET Net News Agency, 2 November 2018] HSBC Global Research lowered its target price for
Jiangxi Copper (00358) to HK$14.5 from HK$16, and maintained its "buy" rating.
The research house said Jiangxi's 9-month net income increased 29% y-y to RMB2,045m.
However, its earnings quality is poor. Its 3Q operating profit actually declined 50% y-y
to RMB1.2bn, while operating margin declined to 2% from 4% a year ago. Cost of sales,
selling expenses and admin expenses all increased on a y-y basis, which suggest the
company continues to struggle to keep cost under control.
The increase in net profit is mainly a result of reduced investment losses from a year
before, indicating that the company's earnings quality remains poor.
HSBC reiterated its concern over Jiangxi's continued expansion of its smelting
operations while its mining operation output is unchanged. This reduces the company's
copper concentrate self-sufficiency and weakens its ability to pass on the benefit of
higher copper prices. (KL)
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00358 JIANGXI COPPER
Nominal 
15.300 -0.500 (-3.165%) Others
02/11/2018 17:39
[I-bank focus]HSBC cuts Jiangxi Copper (00358) to HK$14.5
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