Key takeaway

1. Net profit attributable to shareholders of the parent company reached RMB534mn in 1H26, up 40% YoY. Net profit attributable to shareholders of the parent company reached approximately RMB352mn in 2Q26, up approximately 54% YoY and 94% QoQ. Rising tin prices drove strong earnings growth.

2. Internal growth and external expansion support rapid growth. Internal growth: Capacity expansion at Tongkeng, Gaofeng, and Fozi continues to advance. External expansion: Critical Metals Group has become the company's indirect controlling shareholder. The company is expected to gradually consolidate fragmented mines in Guangxi and inject them into the listed company. In addition, the company and five other corporate entities, including Critical Metals Group, jointly invested in establishing the Guangxi Critical Metals Research Institute. The institute focuses on technology R&D and commercialization in tin, antimony, and indium, supporting the company’s expansion into downstream deep processing.

Event

The company released its 1H26 report

In 1H26, the company generated revenue of RMB3.039bn, up 9% YoY, and net profit attributable to shareholders of the parent company of RMB534mn, up 40% YoY. In 2Q26, the company recorded net profit attributable to shareholders of the parent company of approximately RMB352mn, up approximately 54% YoY and 94% QoQ.

Quick Take

1. Rising tin prices drive strong earnings growth Volume: In 1H26, the company produced 3,672 tonnes of tin concentrate and 5,593 tonnes of tin ingots, representing YoY changes of 12.17% and -9.02%, respectively. It produced 26,705 tonnes of zinc concentrate and 11,393 tonnes of zinc ingots, representing YoY changes of -1.53% and -31.14%, respectively. It also produced 7,309 tonnes of lead-antimony concentrate and 1,009 tonnes of antimony ingots, representing YoY changes of -6.85% and 147.34%, respectively. Price: In 1H26, the average tin price was RMB395,800/tonne, up 44% from the 2025 average of RMB273,900/tonne. The average antimony ingot price was RMB156,300/tonne, down 15% from the 2025 average of RMB184,800/tonne.

Profit: In 1H26, the company’s tin ingot business generated gross profit of RMB505mn, with a gross margin of 32.24%. Its lead-antimony concentrate business generated gross profit of RMB227mn, with a gross margin of 79.08%. Its antimony ingot business generated gross profit of RMB31mn, with a gross margin of 61.86%. The company capitalized on price increases for its key products and maintained stable production at full capacity. Its profitability improved in 1H26.

2. Internal growth: Capacity expansion at Tongkeng, Gaofeng, and Fozi continues to advance

The company is comprehensively accelerating the construction of major projects, including key projects such as the mineral resource development project for tin and zinc ores in the Tongkeng mining area and the deep mining project for ore bodies No. 100 and No. 105 of Gaofeng Company. In addition, the Fozi expansion plan will increase ore processing capacity from 1,100 tonnes per day to 1,500 tonnes per day.

3. External expansion: Critical Metals Group becomes the indirect controlling shareholder, with potential future asset consolidation and injection

In January 2026, Guangxi Critical Metals Industry Development Group Co., Ltd. was established and became the company's indirect controlling shareholder. In May, according to the official website of the People's Government of Nandan County, Critical Metals Group was designated as the lead entity for mining-rights consolidation in the Dachang–Chehe and Mangchang areas; in August, according to the official website of the People's Government of Jinchengjiang District, Hechi City, Critical Metals Group was designated as the entity responsible for consolidating metallic mineral rights in the Jianzhupo consolidation area; according to the official website of the People's Government of Cenxi City, Critical Metals Group was formally confirmed as the qualified entity for the Fozi Chong–Chuntang lead-zinc mine and Longwan–Fenghuangchong lead-zinc mine consolidation areas. On August 31, Guanjin Mining (Guangxi Nandan) Co., Ltd., a subsidiary of Critical Metals Group, signed a mineral rights consolidation agreement with Guangxi Nandan Defa Brothers Investment Co., Ltd., marking Critical Metals Group's first market-based mineral rights consolidation project to be formally implemented. Critical Metals Group is expected to gradually consolidate fragmented mines across Guangxi and inject them into the listed company.

In addition, the listed company contributed cash and its 100% equity interest in the Design and Research Institute to jointly establish the Guangxi Critical Metals Research Institute with Critical Metals Group and four other corporate entities. The research institute focuses on technology R&D and commercialization in tin, antimony, and indium, supporting the company's expansion into downstream deep processing.

4. Price increases: We remain bullish on an upward shift in tin, antimony and indium price levels

Tin: Tin is a scarce strategic metal with relatively dispersed resources, with limited reserves in the Earth's crust and growing difficulty in discovering new high-quality deposits. Coupled with tighter controls over strategic mineral resources worldwide, this will continue to enhance the long-term value of tin's scarcity. As global AI computing infrastructure expands, advanced semiconductor packaging evolves, and penetration rates of energy storage and new energy vehicles continue to rise, tin's growth profile is becoming increasingly compelling as it serves as an essential input for the AI computing and new-energy industries. Global long-term demand for tin has substantial room for growth.

Antimony: China has suspended the acceptance of new antimony mining rights registration applications, and the annual mining quota has been reduced YoY. Ongoing environmental remediation is continuing to phase out small and midsized production capacity. Due to a large influx of low-priced overseas ore, market supply is relatively ample in the short term. On the export side, strict enforcement of export controls has led to a sharp YoY decline in antimony oxide exports. On the demand side, demand from the flame-retardant sector remains weak due to the drag from the traditional real estate value chain, while the photovoltaic glass industry has entered a period of cyclical weakness. As exports and demand recover, antimony prices are expected to stabilize and rebound.

Indium: Indium is mainly recovered as a by-product of zinc and tin smelting. Environmental production curbs at lead-zinc mines worldwide and declining ore grades have reduced primary indium output YoY, leaving limited supply elasticity. Rapid expansion of the AI and semiconductor value chains is driving strong demand growth for indium-based materials, while the photovoltaic and new energy sectors are also providing meaningful incremental demand. The convergence of multiple demand drivers continues to strengthen indium’s position in strategic emerging industries, with supply and demand shifting from ample supply toward a tight balance.

Investment recommendation: We forecast net profit attributable to shareholders of the parent company of RMB1.16bn, RMB1.41bn, and RMB1.69bn for 2026–2028, respectively. This corresponds to PE multiples of 24.34x, 20.05x, and 16.72x at the current share price. Considering the company’s industry position in tin, antimony, lead, and zinc, as well as its strong growth potential, we assign it a “Buy” rating.

Risks:

(1) Tin price fluctuations. The tin business is one of the company’s main sources of gross profit. Tin prices are affected by factors such as supply and demand and the economic environment, and are also closely related to developments in semiconductors and photovoltaics. Fluctuations in tin prices will have a certain impact on the company's cost control and profitability. According to our estimates, if tin prices fall by 5%/10% from our assumptions, the company’s net profit attributable to shareholders of the parent company will decline by 3%/6%.

(2) Raw material price increases. If raw material and labor costs rise, it will have a negative impact on the company's profitability.

(3) Tightening of environmental protection policies. If environmental protection policies related to mineral development tighten, it may affect the production of the company's metal products.

(4) Downstream consumption not meeting expectations. If the demand for the company's main products in the downstream market does not meet expectations, it will have a negative impact on the company's product sales.