JPMorgan has issued a research report initiating coverage on MMG (HKEX: 01208) with an "Overweight" rating and a target price of HK$13, projected for December 2027.

The bank highlights that MMG is a highly pure copper play, with nearly 90% of its gross profit linked to copper in 2025, giving it the highest earnings sensitivity to copper prices among its peers.

While the company's share price has underperformed international peers year-to-date, the bank holds a positive outlook on copper prices and anticipates the valuation gap between Chinese copper stocks and their international counterparts will narrow, providing room for further re-rating of MMG.

JPMorgan expects MMG's earnings conversion capability to improve significantly, benefiting from increased fixed cost absorption and substantive deleveraging.

The company's total borrowings have decreased from US$4.6 billion in the 2024 fiscal year to US$3.3 billion in the 2025 fiscal year, with interest expenses forecast to drop by 26% to US$215 million.

The bank projects that MMG could achieve a net profit compound annual growth rate of 52% between the 2025 and 2028 fiscal years.

Net profit for the 2026 fiscal year is anticipated to reach US$1.6 billion, representing a substantial year-on-year increase of 216%.

Furthermore, the report notes that the Las Bambas copper mine in Peru, owned by MMG, has entered its longest period of stable operations in history since March 2023.

The Phase 2 expansion of the Khoemacau project in Botswana is expected to commence production in the first half of 2028, doubling capacity to 130,000 tonnes per year and serving as a medium-term growth driver.

With ongoing balance sheet improvements, the likelihood of MMG resuming dividend payments is increasing, which could act as a catalyst for share price re-rating.