2025 results higher than our expectations

Sinomine Resource Group announced its 2025 results: Revenue rose 22.0% YoY to Rmb6.55bn, net profit attributable to shareholders fell 39.5% YoY to Rmb458mn, and recurring net profit fell 31.3% YoY to around Rmb414mn, higher than our expectations because of higher lithium price.

Lithium prices recovered but sales volume declined YoY. The firm’s selling prices rose 10% YoY to about Rmb80,989/t in 2025, with lithium prices recovering markedly in 4Q25 and fullyear sales volume of lithium salts falling 7% YoY to about 39,498t LCE, mainly due to overhaul of lithium salt production lines.

Hedging losses and asset impairment weighed on profit. In 2025, the firm suffered a loss of Rmb35mn from changes in fair value, mainly due to hedging losses, and an asset impairment loss of Rmb23mn from inventory depreciation and impairment of construction in progress.

Profit of cesium salts declined. Gross profit of the firm’s rubidium and cesium business reached Rmb0.83bn in 2025, down 24% YoY, as sales volume of cesium salts fell 11% YoY to 750t and gross margin of cesium salts fell 4.2ppt YoY to 74.1%.

Trends to watch

Leveraging advantages in geological exploration; accelerating construction of a polymetallic mining platform. According to annual report, for the lithium business, the firm plans to increase the annual lithium extraction capacity of its lithium mines to more than 100,000t LCE within two years, and continue to seek opportunities in M&A of high-quality lithium mines. For the copper business, the firm expects capacity of its copper mines to reach 50,000t/year in two years, with the incremental capacity coming from the Kitumba project in Zambia. It also expects production capacity of copper metal to reach 100,000t/year within five years.

In addition, the firm plans to consolidate its advantages in the minor metals business, maintain its global market leadership in the cesium business, promote the capacity expansion of its germanium recycling production line, and achieve industryleading output and sales volume of germanium products. In the future, the firm plans to accelerate its expansion into other strategic rare metals and add two-to-four competitive minor metals into its product mix in five years.

Financials and valuation

As higher lithium price, we raise our 2026 earnings forecast 170% to Rmb2.22bn and introduce our 2027 earnings forecast of Rmb3.33bn. The stock is trading at 25.3 x 2026e P/E and 16.9x 2027e P/E. Considering the limited sustainability of high lithium price, we maintain an OUTPERFORM rating and raise our target price 130% to Rmb96.16, implying 31.3x 2026e P/E, offering 24% upside.

Risks

Policy changes in Zimbabwe; disappointing progress of projects; sharper-than-expected decline in lithium prices.