Analysts at Bank of America Securities have issued a research report reiterating a "Buy" rating on CMOC (03993) with a target price of HK$22.

The company released a positive profit alert, forecasting net profit attributable to shareholders for the first half of 2026 to be between RMB 15.5 billion and RMB 16.5 billion, representing a year-on-year increase of 79% to 90%.

Based on this, second-quarter net profit is estimated to be approximately RMB 7.7 billion to RMB 8.7 billion, marking a year-on-year growth of 64% to 85% and a sequential change ranging from 0% to 13%.

This performance exceeded market expectations, as investors had previously been concerned about the potential impact of rising sulphur costs on profit margins.

Key Drivers of Resilient Performance

The bank's analysis suggests the robust second-quarter results reflect a combination of several factors: increased copper production, with first-half output reaching 388,000 tonnes, up 9.7% year-on-year, implying second-quarter output of around 200,000 tonnes, a 6% increase sequentially; quarter-on-quarter rises in copper and molybdenum prices; effective control of sulphur costs through a three-month inventory cycle; and an additional month of earnings contribution from consolidated Brazilian gold assets compared to the first quarter.

These positive factors were partially offset by assumptions for super tax provisions at the copper mines in the Democratic Republic of Congo and declines in tungsten and gold prices during the quarter.

Outlook and Valuation Assessment

Bank of America remains optimistic about copper price resilience, production growth, and attractive valuation.

The bank forecasts copper prices of $12,900 per tonne for 2026 and $15,200 per tonne for 2027, and anticipates that expansion at the TFM and KFM mines will boost copper production to between 800,000 and 1 million tonnes by 2028.

The stock's current price implies a forward price-to-earnings ratio of approximately 8 times for 2027, which the bank views as not expensive.

Looking ahead, the bank expects the impact of sulphur costs to become more pronounced in the third quarter based on FIFO accounting and the three-month inventory cycle, but this could be partially offset by continued strong metal prices, cost control measures, and a sequential increase in cobalt sales volumes.