1H25 results in line with our expectations

Yunnan Tin announced its 1H25 results: Revenue rose 12.3% YoY to Rmb21.1bn, and attributable net profit grew 32.8% YoY to Rmb1.06bn. In 2Q25, revenue rose 9.5% YoY and 16.8% QoQ to Rmb11.4bn; and attributable net profit rose 18.8% YoY and 12.6% QoQ to Rmb562mn. We attribute the substantial earnings growth in 1H25 to rising prices of metals such as tin and zinc.

Rising tin and zinc prices drove rapid earnings growth in 1H25. Data

from Wind shows that domestic ASP of tin and zinc rose 9% and 5% YoY to Rmb261,737/t and Rmb23,258/t in 1H25. In 1H25, the firm’s gross margin of tin and zinc products rose 0.44ppt and 5.84ppt YoY to 13.2% and 43.4%.

Gross margin increased in 2Q25 despite headwinds, thanks to efforts to reduce costs and improve efficiency. Data from Wind shows that

domestic ASP of tin, zinc, copper, and indium changed +0%, -4%, -2%, and -4% YoY (or +1%, -6%, +1%, and -2% QoQ) in 2Q25. The firm has taken the initiative to control the pace of operations and seize market opportunities to reduce costs and improve efficiency. In 2Q25, the firm's gross margin rose 0.5ppt YoY and 1.6ppt QoQ to 13.1%.

Trends to watch Strengthening leadership in tin industry through internal efforts and

external expansion. According to company announcements: First, the firm held nearly 626,200t of tin metal resources as of end-2024. The firm plans to further strengthen resource exploration in the Kafang mining area, increase comprehensive utilization of tailings resources, and continue to improve the value creation of existing mines.

Second, since August 2024, the company has signed strategic cooperation agreements with Indonesia's PT Timah, the Hexigten Banner People's Government, and Inner Mongolia Xingye Silver & Tin Mining to collaborate with partners on resources, businesses, and technologies.

Third, the firm has ranked No.1 in the world as measured by tin output and sales volume since 2005, and its share reached 48% in the domestic tin 　　market and 25% in the global market in 2024.

Rising average tin prices to unleash growth potential for the firm’s

earnings. Near-term perspective: The Bureau of Industry and Mining of Myanmar's Wa State held a symposium on production resumption of the Mansiang mining area on July 15, officially promoting the resumption of production at local tin mines. According to customs data, China's tin ore imports from Myanmar fell 77% YoY over January-July. We expect tin prices to recover gradually, as the pressure from production resumption in Myanmar eases and trading driven by interest rate cuts unfolds.

In the long term, we believe the AI boom will boost demand for tin solders, and frequent disruptions to tin supply may increase demand for safety stocks. We expect tightening supply-demand conditions to drive up average tin prices. According to the company announcement, tin products accounted for 47% of its gross profit in 1H25, and we are upbeat on the firm's profit growth driven by rising tin prices.

Financials and valuation

We keep our 2025 earnings forecast largely unchanged, and raise our 2026 net profit forecast 18% to Rmb2.87bn due to elevated expectations for tin prices in the medium and long term. The stock is trading at 14.3x 2025e and 11.8x 2026e P/E. We maintain an OUTPERFORM rating, and due to earnings forecast revisions and improving market risk appetite, we raise our target price 46% to Rmb26.1, implying 18.2x 2025e and 15x 2026e P/E, offering 27.3% upside.

Risks

Semiconductor demand disappoints; production resumption in Myanmar beats expectations; overseas supply beats expectations.