3Q26 results in line with our expectations

The firm announced its 1–3Q26 and 3Q26 results: Revenue rose 19.97% YoY to Rmb11.92bn, and attributable net profit rose 41.83% YoY to Rmb2.49bn. In 3Q26, revenue rose 1.15% QoQ and 18.2% YoY to Rmb4.28bn, and attributable net profit fell 13.87% QoQ and grew 35.82% YoY to Rmb872mn. The firm’s 3Q26 results were in line with our expectations.

Mining service business continued to recover; YoY growth turned positive. The YoY growth rate of gross profit turned positive to 15.29% in 1–3Q26. In 3Q26, the firm’s gross profit rose 24.45% YoY and 2.13% QoQ, mainly due to strengthened control over project processes, optimized production and organizational structure, and rapid growth of new projects.

Resource business maintained rapid growth; QoQ decline in sales volume slightly dragged earnings. In 1–3Q26, gross profit rose 44.91% YoY. In 3Q26, gross profit rose 25.9% YoY but dropped 15.37% QoQ. In 1–3Q26, copper metal (equivalent) output rose 12.9% YoY to 72,000t. In 3Q26, output and sales volume of copper rose were 25,300t (+2.92% YoY and +3.01% QoQ) and 23,800t (-2.17% YoY and -5.07% QoQ). The growth in 1–3Q26 earnings was mainly due to increased output and YoY growth of 32.41% in copper prices. The QoQ earnings decline in 3Q26 was mainly due to a short-term decline in sales volume caused by changes in the pace of sales.

Share buyback plan shows confidence in growth. The firm plans to buy back shares totaling Rmb300–400mn (0.64%– 0.85% of its equity base) for equity incentives or employee stock ownership plans (ESOPs). The shares will be granted to employees at a price of no more than Rmb75/sh.

Trends to watch

The development of mining services and resource business has been further deepened; global capital operations are expected to usher in a new stage of development. The firm continues to advance this development model in depth. It issued H-shares in July 2026 to expand financing channels and promote global expansion. We believe the acquisition of high-quality overseas mining service projects will help the mining service business regain an upward trend, and diversified capital platforms will boost the growth potential of the resource segment.

The accelerated release of copper mine production capacity has made the resource sector the main growth driver.

According to the firm’s announcement, it owns four copper mines with 3.33mnt of equity copper metal resources. It plans to produce approximately 100,000t copper equivalent in 2026, representing YoY growth of 9.4%; the output will likely reach around 180,000t by 2030, implying a CAGR of 15% from 2025 to 2030. We believe the firm's mining service business effectively empowers the resource segment, and strategic synergies will help accelerate its earnings growth.

Financials and valuation

We maintain our 2026 and 2027 earnings forecasts of Rmb3,396mn and Rmb3,809mn. A-shares are trading at 10.5x 2026e and 9.4x 2027e P/E. We maintain an OUTPERFORM rating and cut our target price 26.3% to Rmb76.21 due to falling risk appetite, implying 14x 2026e and 12.5x 2027e P/E and offering 33.4% upside.

Risks

Sharp fluctuations in product prices; slower-than-expected progress in projects; rising geopolitical risks.