2024 and 1Q25 results in line with market expectationsIn 2024, revenue rose 34.37% YoY to Rmb9.94bn, net profit attributable to shareholders grew 53.59% to Rmb1.58bn, and recurring net profit grew 52.74% YoY to Rmb1.57bn.

In 1Q25, attributable net profit rose 54.11% YoY but fell 14.01% QoQ to Rmb422mn.

2024 and 1Q25 results are in line with market expectations. We attribute the strong YoY growth in 2024 and 1Q25 earnings to capacity expansion at copper mines.

Mining service segment remained stable; growth of mining resources segment accelerated. Mining service segment’s 2024 revenue fell 0.96% YoY to Rmb6.54bn, accounting for 65.82% of total revenue, with overseas mining service business accounting for 63.04%. In 1Q25, revenue fell 3.29% YoY and 9.99% QoQ to Rmb1.50bn. We attribute the revenue decline to power shortages in the Democratic Republic of the Congo (DRC) that affected the progress of some projects and the internalization of the acquired Lubambe business.

In 2024, the mining resources segment generated revenue of Rmb3.21bn (up 412.85% YoY) and gross profit of Rmb1.36bn (up 347.93% YoY), accounting for 43.65% of total gross profit (+30ppt YoY). Revenue rose 232.70% YoY and 4.93% QoQ to Rmb1.30bn in 1Q25. The firm produced 48,700t of copper and 356,500t of phosphate ore in 2024, up 158.62% and 115.65% YoY.

Trends to watch

A leading provider of integrated mine operation services; mining services plus mining resources strategy to drive rapid growth. The mining services segment: The firm has gained a strong reputation overseas on the back of its technological expertise and extensive construction experience in the mine development services. The firm is expanding its presence in both domestic and overseas markets. Although growth has slowed in the short term due to headwinds from some regions, we expect earnings from mining services to continue to improve steadily, as it continues to explore both domestic and foreign markets.

transformation from a mine development service company to an integrated mining company. We believe the services plus resources strategy has achieved leapfrog development, and we are upbeat on its long-term resource growth.

Copper mine output growth accelerates; growth of the mining resources segment to accelerate. According to corporate filings, the firm plans to produce 79,400t copper metal (equivalent) in 2025, up 63% YoY. First, the Lonshi copper mine in the DRC has a designed annual production capacity of 40,000t, and the firm plans to produce about 43,000t in 2025; second, the Dikulushi copper mine in DRC, which the firm plans on producing about 12,000t of copper in 2025; and third, the firm holds a stake in Cordoba Mining in Colombia (59.99% stake in the project), which the firm has submitted an environmental assessment for government evaluation, and plans to produce 25,000t of copper metal and 1.5t of gold annually. Fourth, the Lubambe copper mine in Zambia is scheduled to undergo technological upgrading and achieve annual copper output of 32,500t in 2027 and 24,000t in 2025. We believe the mining services plus mining resources strategy will help its earnings growth accelerate.

Financials and valuation

We maintain our 2025 and 2026 earnings forecasts. The stock is trading at 12x 2025e and 10x 2026e P/E. We maintain an OUTPERFORM rating and TP of Rmb57, implying 18x 2025e and 14x 2026e P/E, offering 49% upside.

Risks

Sharp fluctuations in product prices; disappointing capacity expansion; geopolitical risks in countries where overseas projects are located.