1H26 results beat our expectations

The company reported 1H26 results: Revenue rose 60% YoY to Rmb121.8bn; attributable net profit grew 108% YoY to Rmb2.99bn. In 2Q26, revenue came in at Rmb57.1bn, up 40% YoY but down 12% QoQ; attributable net profit came to Rmb1.65bn, up 430% YoY and 24% QoQ. The 1H26 results hit a record high and beat our expectations, mainly driven by sharp increases in copper and by-product sulfuric acid prices.

Higher copper and sulfuric acid prices offset the decline in smelting and refining charges, driving record-high earnings. According to Wind, average SHFE copper and sulfuric acid prices in 1H26 were Rmb101,957/tonne and Rmb1,526/tonne, up 32% and 161% YoY. The average spot treatment charges (TC) for copper smelting in 1H26 fell further to -US$76/dry metric tonne from -US$24/dry metric tonne in the same period last year. On a quarterly basis, average SHFE copper and sulfuric acid prices rose 33% and 192% YoY and 2% and 64% QoQ in 2Q26.

Trends to watch

The anticipated commissioning of Mirador Phase II, combined with the group's substantial resource base, may systematically lift the company's self-produced copper output.

First, the Mirador Phase II project completed construction and trial operations in June 2025. The company is now advancing the signing of the mining contract. We estimate that once the Phase II project reaches full capacity, the company's selfproduced copper output could reach 300,000 tonnes, up 52% from 2025 levels. Second, the firm’s controlling shareholder retains the mineral rights of Panantza and San Carlos, with estimated ore resources of 463mn tonnes at 0.66% and 600mn tonnes at 0.59%.

Smelting margins improved as sulfuric acid prices rose; recovering supply-demand dynamics in the copper foil industry boosted earnings elasticity. First, geopolitical conflicts have disrupted sulfur supply, tightening domestic sulfuric acid supply-demand and driving a sharp price increase. In 1H26, the company's revenue from chemicals and other products rose 143% YoY, with gross margin reaching 76%, up 20.58ppt YoY.

Second, improving supply-demand dynamics in the LiB copper foil industry have stabilized processing fees, while strong growth in AI servers is accelerating demand growth for highperformance printed circuit board (PCB) copper foil. Profit improvement at the company's controlled subsidiary Tongguan Copper Foil provides additional earnings elasticity.

Financials and valuation

Given higher prices for the company's major products, we raise our 2026 attributable net profit forecast 17.8% to Rmb6.25bn, and introduce a 2027 attributable net profit forecast of Rmb9.0bn. We maintain our OUTPERFORM rating. Considering the upward revision of our earnings forecasts and the controlled subsidiary's strong copper foil business, we raise our target price 61.06% to Rmb8.05. The stock is trading at 14.5x 2026e and 10.1x 2027e P/E, while our target price implies 17.3x 2026e and 12.0x 2027e P/E, offering 19.13% upside.

Risks

Lower-than-expected copper prices; profit from copper smelting disappoints; project expansion falls short of expectations.