UBS has released a research report stating that it has significantly lowered its target price for Jiangxi Copper Company Limited (00358) by 41.5% from HK$65 to HK$38, while maintaining its 'Buy' rating.

The bank has reduced its target price-to-earnings multiple for the copper business from 12x to 8x on 2027 forecasts, and has also cut its 2026 and 2027 earnings forecasts by 5% and 15% respectively. This primarily reflects more conservative assumptions for average sulphuric acid selling prices and long-term contract treatment charges, as well as declining earnings visibility.

UBS stated that it maintains a constructive view on copper prices, believing that electrification, grid investment, and AI-related power infrastructure are driving copper prices into a higher structural price range, while declining ore grades, long project development cycles, and constrained capital expenditure are limiting the supply-side response.

However, the bank noted that Jiangxi Copper's hybrid business model, which spans mining, smelting, and futures hedging, makes it difficult for higher copper prices to translate directly and consistently into earnings in the same way as upstream-focused miners with stronger growth.

The company's quarterly earnings remain affected by factors including regional sulphuric acid pricing, copper concentrate procurement, changes in treatment charges, timing differences in the recognition of futures versus physical profits, and non-recurring investment gains.

Within UBS's coverage, the bank prefers the valuation and high-grade resources of China Molybdenum Co., Ltd. (03993), as well as the gold business exposure of Zijin Mining Group Co., Ltd. (02899). It remains relatively cautious on Jiangxi Copper's earnings visibility.