Key takeaway

1. In 2025, the company achieved a total revenue of RMB13.83 billion, +1.9% YoY; a net profit attributable to the parent company of RMB3.15 billion, +5.8% YoY. On top of this, the company achieved a net profit attributable to the parent company of RMB870 million in 4Q25, +10.3% YoY.

2. Benefiting from the manufacturing upgrades and military industry development, coupled with supply rigidity, the bullish run for molybdenum prices continues.

3. The company’s shareholding ratio in Anhui Jinsha Molybdenum Mine increased from 10% to 34%; in 2025, the company's equity production of molybdenum was about 22,000 tons, and after the Shapinggou Molybdenum Mine reaches full production capacity, the equity-based output of the company will increase by 7,500 tons. Concerns about forward prices have weakened, and the company is expected to see revaluation.

Event

The company released its 2025 earnings results In 2025, the company achieved a total operating revenue of RMB13.83 billion , +1.9% YoY; a net profit attributable to the parent company of RMB3.15 billion, +5.8% YoY.On top of this, the company achieved a net profit attributable to the parent company of RMB870 million in 4Q25, +10.3% YoY.

The company released the "Announcement on the Progress in Acquisition of Partial Equity of a joint-stock Company" The company signed a "Project Cooperation and Equity Transfer Agreement" with Zijin Mining,under which the company will acquire 24% equity of Anhui Jinsha Molybdenum Co., Ltd. for a consideration of RMB1,730.87 million, increasing the company's equity holding in Jinsha Molybdenum from 10% to 34%.

Brief comment

1. In 2025, the company achieved a net profit attributable to the parent company of RMB3.15 billion In 2025, the average price of domestic molybdenum concentrate (45%-50%) was RMB3,838 /mtu, up 6.6% YoY; since 2026, the price of molybdenum concentrate has basically remained above RMB4,000/mtu, and the recent price has been maintained at around RMB4,400/mtu. We maintain our previous assessment: molybdenum demand wave is in line with the major cycle of China's manufacturing upgrade, which is essentially an upgrade from "iron element" consumption (mainly driven by infrastructure and real estate construction) to "alloy element" consumption. The molybdenum demand continues to benefit from the rapid development of shipbuilding, wind power, military industry, new energy equipment, chemical, and oil and gas industries. Molybdenum demand is rising steadily, which, coupled with the rigidity of supply, is the main reason for the continuous upward shift of the bottom and pivot of molybdenum prices in recent years.

2. The global wave of developing manufacturing/military industries remains unchanged, and downstream demand for molybdenum will continue to be strong.

In 2025, China's total ferromolybdenum steel bidding volume was 155,300 tons, a YoY increase of 6%; in 1Q26, the total was 41,300 tons, a cumulative YoY increase of 6%. We believe that as long as the development trend in manufacturing and military industries remains unchanged in China and other countries around the world, molybdenum demand is expected to remain robust. In 2028 and beyond, with the high-confidence projects such as Zijin Mining (Anhui Jinzhai Shapinggou/Julong) and Yankuang Energy (Caosiyao) being put into operation, the molybdenum industry will face a deterioration in supply. However, since Zijin and Jinduicheng Molybdenum are cooperating to develop the Shapinggou molybdenum mine, and as the main marginal supply increment, we expect that both parties will fully consider the impact of the project's commissioning on molybdenum prices. Coupled with strong demand support, molybdenum prices may be unlikely to fall significantly in the long run.

3. The company's shareholding in Jinsha Molybdenum Mine increased from 10% to 34%, providing long-term growth potential.

The company signed a "Project Cooperation and Equity Transfer Agreement" with Zijin Mining to acquire 24% of the equity of Anhui Jinsha Molybdenum Co., Ltd. for a consideration of RMB 1,730.87 million, increasing its shareholding in Jinsha Molybdenum from 10% to 34%.

[Mining End]: Jinsha Molybdenum owns the mining rights of the Shapinggou molybdenum mine. The mine is a rare super-large undeveloped porphyry molybdenum mine in the world, with advantages such as large reserves, single composition, concentrated ore bodies, and relatively high grades. Its retained molybdenum metal resources are 2.1 million tons (including reserves), with an average grade of 0.187%, and molybdenum metal reserves are 1.1 million tons, with an average grade of 0.2%. The operation of Jinsha Molybdenum and the development and construction of the Shapinggou molybdenum mine are led by Zijin Mining. The mining right of the project is valid until July 28, 2053. It adopts underground mining, and the beneficiation process is coarse crushing + semi-autogenous grinding + ball milling + flotation + concentrate thickening and filtration. The designed production capacity is 10 million tons/year, and the product is molybdenum concentrate (containing 57% molybdenum grade). The construction period of the project is 4.5 years. After completion and reaching full production capacity, the average annual output of molybdenum will be about 22,100 tons.

[Smelting End]: Both parties agreed that Jinsha Molybdenum and the company will jointly establish a separate smelting company at the location of the Shapinggou molybdenum mine to engage in the smelting and deep processing of molybdenum metal. Jinsha Molybdenum's direct shareholding ratio in the smelting company is 49%, and the company will hold 51% stake in the smelting company, leading the the construction and operation of the joint-stock company.

Impact:

(1) Volume increase: The company's equity-based molybdenum production capacity was about 22,000 tons in 2025. After the Shapinggou molybdenum mine reaches its designed capacity, it will add 7,500 tons of equity-based output (22,100 tons * 34%).

(2) Weakened concerns over forward prices: Previously, the market was quite concerned about molybdenum forward prices. The core contradiction was that the commissioning of molybdenum mines such as Shapinggou would affect the forward supply-demand balance. Currently, with the strong alliance between Zijin and Jinduicheng Molybdenum (JDC), as the main marginal supply increment, it is expected that both parties will fully consider the impact of project commissioning on molybdenum prices, and molybdenum forward prices may be unlikely to fall sharply.

(3) Valuation expected to be reshaped: In contrast, since Zijin acquired the Shapinggou molybdenum mine in 2022, the core factor suppressing JDC's valuation is expected to be eliminated. As an important strategic metal and a representative metal for the accelerated transformation and upgrading of China's manufacturing industry, molybdenum's valuation is expected to rise systematically.

Risks:

1. Downstream demand falls short of expectations. The World Bank released the latest issue of the "Global Economic Prospects" report, stating that despite persistent trade tensions and policy uncertainty, the resilience of the global economy is stronger than expected. Global economic growth is expected to remain generally stable over the next two years, with the growth rate slowing to 2.6% in 2026 and rebounding to 2.7% in 2027. However, the Middle East conflict has led to rising oil prices, and the world is facing stagflation and recession pressures. If the downstream demand for molybdenum steel falls short of expectations, it may have an adverse impact on the company's sales. If the molybdenum price falls by 3%/5% in 2026 compared to our assumed value, the company's net profit attributable to the parent will decline by 4.6%/7.7% compared to our expectations.

2. Molybdenum supply increases faster than expected. If domestic and foreign molybdenum mines are commissioned in a concentrated manner beyond expectations, a large amount of incremental supply will be released, and molybdenum prices will be under pressure.