[ET Net News Agency, 4 July 2018] Morgan Stanley trimmed its target price for China
Molybdenum (CMOC)(03993) to HK$6 from HK$8, and retained its "overweight" rating.
The research house updated its forecasts after reconciling 1Q profit guidance and the
2018 price outlook. Specifically, Morgan cut moly production volume by 4%/4%/3% in 2018-20
and lifted its assumptions for the cobalt price by 1%/8% and the copper price by 1%/5% in
2018/19, respectively.
It also incorporated higher royalties, due to changes in the DRC mining code, with a
base case assumption of a 3.5% royalty for copper and 10% for cobalt, from 2% previously.
In addition, Morgan adjusted the company's minority interest to reflect 80% control over
Tenke since 20 April 2017. These changes have led to 4%/2%/-5% EPS changes for 2018/19/20,
respectively. (KL)