CMOC Group released its Q3 2025 financial report, reporting revenue of RMB 145.485 billion, down 5.99% year-on-year (YoY). Net profit attributable to shareholders rose 72.61% YoY to RMB 14.28 billion, while adjusted net profit grew 69.98% YoY to RMB 14.537 billion.

(1) **Output Surpasses 75% of Midpoint Guidance, Cobalt Costs Decline Significantly** In Q3 2025, CMOC’s key product prices rose YoY, with production volumes exceeding 75% of the midpoint guidance. Output for copper, cobalt, molybdenum, tungsten, niobium, and phosphate fertilizers increased by 14.14%, 3.84%, -6.38%, -2.10%, 2.07%, and 1.92% YoY, respectively, achieving 86%, 80%, 79%, 86%, 78%, and 79% of annual targets. According to iFinD data, average prices for copper, cobalt, ferromolybdenum, APT, niobium, and monoammonium phosphate rose by 4.89%, 10.56%, 5.57%, 30.06%, 1.13%, and 5.08% YoY.

Improved operational efficiency and cost controls lifted gross margin by 4.33 percentage points (p.p.) to 21.96%, while net margin rose 5.18 p.p. to 11.33%. By product, gross margins for copper, cobalt, molybdenum, tungsten, niobium, and phosphate fertilizers increased by 1.73 p.p., 26.97 p.p., 7.35 p.p., 1.13 p.p., 16.61 p.p., and 6.65 p.p. YoY. Enhanced productivity at TFM and KFM mines drove cobalt operating costs down 46.95% YoY.

(2) **Lower Financial Expense Pressure; KFM Phase II Project Announced** Sales, management, and financial expense ratios changed by +0.01 p.p., +0.14 p.p., and -0.95 p.p. YoY, respectively. The company optimized its debt structure by reducing long-term borrowings, easing financial costs.

CMOC will invest USD 1.084 billion in the KFM Phase II project, funded internally and via self-raised capital. The two-year construction phase is set for completion in 2027, adding 7.26 million tonnes of annual ore processing capacity and an estimated 100,000 tonnes of copper output per year.

(3) **Earnings Forecast and Rating** CMOC’s dual growth drivers—copper and cobalt—along with potential gold resource contributions, support its outlook. Given stronger-than-expected capacity and rising cobalt prices, we raise 2025–2027 net profit forecasts to RMB 19.225 billion, RMB 22.534 billion, and RMB 25.150 billion, with EPS at RMB 0.90, RMB 1.05, and RMB 1.18 per share. At 18.64x 2025 P/E (above peers), CMOC’s growth prospects justify a "Buy" rating.

**Key Risks**: - **Commodity price volatility**: Fluctuations in copper, cobalt, molybdenum, tungsten, niobium, and phosphate prices may impact earnings. - **Geopolitical and policy risks**: Operations across multiple jurisdictions expose CMOC to regulatory shifts. - **Interest rate risk**: Borrowing cost changes could affect financial performance. - **Currency risk**: Exposure to USD, HKD, EUR, CAD, CNY, BRL, GBP, and CDF exchange rate movements. - **Safety, environmental, and natural disaster risks**: Mining operations face potential accidents or extreme weather disruptions.