[ET Net News Agency, 2 July 2019] HSBC Global Research raised its target price for
Jiangxi Copper (00358) to HK$15.25 from HK$14.5 and maintained its "buy" rating.
The research house said the company has continued expansion of its smelting operations
over the past several years while its mining operation output is unchanged. It added 100kt
smelting capacity in 2017, making its total smelting capacity 1,300kt but copper mining
capacity remains the same at 210kt.
HSBC views such expansion as low-quality growth, because this reduces the company's
copper concentrate self-sufficiency, and weakens its ability to pass on the benefit of
higher copper prices.
Despite the lack of high-quality mining growth, HSBC thinks the risk-reward is
favourable given its positive copper price outlook and the stock's cheap valuation. (KL)