Results Review

1H26 results beat our expectations Western Mining announced its 1H26 results: Revenue rose 25% YoY to Rmb39.4bn, and net profit attributable to shareholders grew 123% YoY to Rmb4.17bn. In 2Q26, revenue rose 37% YoY and 11% QoQ to Rmb20.7bn, and net profit attributable to shareholders grew 143% YoY and 63% QoQ to Rmb2.58bn. The firm's 1H26 results hit a record high and beat expectations, mainly due to a sharp rise in prices of copper, molybdenum, and byproduct sulfuric acid.

Output of most minerals exceeded plan; prices of copper, molybdenum and byproduct sulfuric acid rose; earnings hit a record high. In 1H26, the firm's output of mineral copper, lead, and zinc reached 89,708t, 29,456t, and 63,906t (-2%, - 16%, and +2% YoY), and its mineral molybdenum output was 2,368t (-6% YoY), with the actual output as a percentage of plan for the four major minerals reaching 106%, 96%, 102%, and 109%. The failure to complete the plan for mineral lead was mainly due to lower-than-planned treatment volume and selected grade of raw ore. The firm's output of byproducts sulfuric acid and sulfur reached 417,400t and 26,400t. According to iFinD, domestic ASP of copper, zinc, molybdenum and sulfuric acid rose 31%, 5%, 28%, and 162% YoY in 1H26, and domestic ASP of lead fell 2%.

Trends to watch

Construction of key projects accelerating; increasing reserves and output to further boost growth potential. According to corporate filings, the company plans to complete the infrastructure construction of the Yulong Copper Phase III project by the end of this year, with the annual ore treatment capacity of the mine rising from 22.8mnt to 30mnt (+32%) after the project starts operation. The firm completed the prefeasibility study of its 45mnt/yr capacity expansion project at end-June (+97% vs. current level), and it is advancing the preliminary work on supporting infrastructure for the project.

The company is also actively promoting the conversion from exploration to mining for Chating Mining. It obtained the survey permit in early February, and completed the ground drilling of the Chating copper-polymetallic mine in May. At present, the firm is carrying out sample testing, beneficiation testing, and industrial indicator demonstration in an orderly manner. It is advancing the preparation of reserve verification reports, and aims to put the project into operation by the end of 2030, providing strong support for the company's further production growth.

Financials and valuation

We raise our 2026 and 2027 earnings forecasts 50.4% and 53.7% to Rmb7.72bn and Rmb8.67bn due to rising prices of major products and accelerated construction of key projects. The stock is now trading at 11.4x 2026e and 10.1x 2027e P/E. We maintain an OUTPERFORM rating and raise our TP 50.4% to Rmb48.62, implying 15.0x 2026e and 13.4x 2027e P/E and offering 31.73% upside.

Risks

Falling metal prices; slower-than-expected progress of projects; macro risks from geoeconomic conflicts.