[ET Net News Agency, 26 September 2018] HSBC Global Research lowered its target price
for Zijin Mining (02899) to HK$4.1 from HK$4.5, and maintained its "buy" rating.
The research house said stable commodity prices and healthy mined volumes helped the
company to improve its result in 1H. But it noted that base metals prices started to
decline after the escalation of US-China trade tensions in June. HSBC expects LME copper
and zinc prices to fall 12% and 22% respectively in 2H versus 1H.
Although it continues to see a tightly balanced copper market and higher long-term
copper price, HSBC thinks the increasing risk of slower global trade and a strong USD will
continue to weigh on sentiment and prices in the near term.
Over the next 2-3 years, it expects Zijin to raise its mined copper output towards 330kt
by 2020/21 (from 208kt in 2017), through the expansion of the Duobaoshan and Kolwezi
mines. It also expects Kamoa-Kakula and the recent acquisition announcements of Canadian
miner Nevsun Resources and Serbian miner RTB Bor Group to drive long-term earnings growth.
HSBC cut its net income estimates for 2018 and 2019 by 8% and 9%, factoring in its
reduced near-term prices. (KL)