Results Review

2025 and 1Q26 in line with our expectations In 2025, revenue rose 39.7% YoY to Rmb13.89bn, and net profit attributable to shareholders grew 47.7% YoY to Rmb2,339mn. In 1Q26, revenue rose 21.4% YoY to Rmb3,414mn, and net profit attributable to shareholders grew 42.6% YoY to Rmb601mn. The firm’s 2025 and 1Q26 results are in line with our expectations.

The resource segment surpassed the mining service segment as the largest source of profit for the first time. In 2025, gross profit of the mining service segment fell 13.5% YoY to Rmb1.51bn, and that of the resource segment rose 130.2% YoY to Rmb3.12bn, indicating the resource segment surpassed mining service as the main source of profit for the first time.

Mining services: Earnings were temporarily under pressure due to internalization of the Lubambe mine business, temporary suspension of the project in the Democratic Republic of the Congo (DRC) due to a mine earthquake, and short-term disruptions caused by business losses at the newly acquired Terra Mining business.

Resource: The firm's copper mine sales volume and prices both increased, with copper metal (equivalent) sales volume rising 88.2% YoY to 92,700t in 2025, and LME copper prices rising 21.7% YoY.

We believe the worst is over for the mining services sector, and we expect the firm’s mining services business to resume growth as new projects commence operation. The resource segment will continue to see earnings growth, driven by rising sales volume and prices.

Trends to watch

A leading provider of integrated mine operation services; the "mining services + resources" strategy to drive rapid growth. The company has adopted the development model of "mining services + resources". The company continues to enhance its resource strength and accelerate its transformation into a mining conglomerate. We believe the firm's "mining services + resources" strategy has started to fuel growth, and we are upbeat on the long-term growth in its resource strength.

Copper mine output to accelerate; growth of resource segment to accelerate. According to corporate filings, as of 2025, the company had four copper mines, its attributable copper metal resources reached 3.29mnt, and its copper metal (equivalent) output grew 87.9% YoY to 91,400t. The firm plans to increase its copper output to around 100,000t in 2026 (+9.4% YoY). We believe the firm's "mining services + resources" strategy bodes well for its earnings growth.

Financials and valuation

In view of rising copper prices, we raise our 2026 earnings forecast 10.5% to Rmb2.97bn and introduce our 2027 earnings forecast of Rmb3.34bn. The firm’s A-shares are trading at 13.1x 2026e and 11.6x 2027e P/E. We maintain an OUTPERFORM rating and raise our target price 10.5% to Rmb80.89 (17.0x 2026e and 15.1x 2027e P/E), implying 30% upside.

Risks

Sharp fluctuations in product prices; disappointing progress of projects; rising geopolitical risks.