江西铜业（358）江西铜业（358 HK 600362 CH）持有 非交易路演要点

Disclosures & DisclaimerThis report must be read with thedisclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.Mid-year TC/RCcontract negotiationshappening now couldbe a negative surprise as spot TC/RC is in the negative zoneJXC guided to maintainingits self-producedcopper output at200kt and is actively looking at M&A opportunitiesMain Hold/Hold ratings on H/A with unchangedTPs atHKD13.00/RMB22.20We hosted Jiangxi Copper (JXC) investor relations on a non-deal roadshow (NDR) callon 28 May 2025;we highlight the key takeaways below:Better-than-expected profitability YTD:Despite the TC/RC contract fee dropping tocUSD20/t in 1H25–well below the previously estimatedbreakevenlevel of USD30–35/tby the industry players–JXC remained profitable in 1Q25. This was supportedby 1) higher recovery rates at its smelters (99.9% actual vs. 96.3% contractual); 2)sales of by-products (e.g., sulphuric acid);and 3) recovery of other valuable metalsduring the smelting process. As a result, more smelters in China are operatingprofitably than the market had anticipated at the end of 2024.Watching TC/RCnegotiationsfor 2H25:Spot TC/RCs have continued to declineYTD and are currently in negative territory (cUSD-20/t). Chilean miner Antofagasta isin the process of renegotiating its mid-year contracts withsmelters, andwe expectthe outcome to be unfavourable for smelters due to intense competition, oversuppliedcapacity, and the fact that some smelters remain profitable even at current contractlevels. The negotiation outcome is likely to set a lower, or even negative, benchmark,which could push most smelters into loss-making territory. JXC currently has 80% ofits smelting capacity under long-term contracts.Copperproduction outlook:JXC’s copper production declined slightly in 2024following the closure of open-pit mining at the Yongping mine. However,we expectthat willbe offset by thePhase III expansion of the Wuhan copper mine. Overall,self-produced copper output is expected to remain stableat c200kt per annum. Forfurther M&A, JXC remains focused on copper resources, with a preference for Beltand Road countries (e.g., Central Asia and Africa) to mitigate geopolitical risks.R&D andcapex plans:R&D efforts will continue to focus on improving metalrecovery rates and developing new copper products to meet evolving demand.For 2025, JXC has budgeted RMB10bn incapex, including RMB2bn for maintenanceand RMB8bn for strategic investments and mine development.Reiterate Hold:We reiterate ourHoldrating on JXC-H/A. Higher copper and goldprices, improved metal realisation rates (99% actual vs. 96.3% contractual), and by-product sales have partially offset the sharp decline in TC/RC charges. However, theoutcome of upcoming TC/RC contract negotiations may again test the company’sprofitability. We believe the shares are fairly valued at current levels.Jiangxi Copper(358 HK/600362 CH)Hold/Hold: Key takeaways from NDR ◆◆◆ Find out more358 HK/0358.HKXXXXXX.XX67,840/8,6559999.9978%/33%XXXXXX.XX33/809999.9912/2026e12/2027e1.651.772.121.651.772.120.00.00.01.782.022.26 2Financials & valuationFinancial statementsYear to12/2024aProfit & loss summary(CNYm)Revenue519,248EBITDA14,048Depreciation & amortisation-2,665Operating profit/EBIT11,383Net interest-440PBT9,039HSBCPBT9,039Taxation-1,686Net profit6,901HSBC net profit6,901Cash flow summary(CNYm)Cash flow from operations2,508Capex-8,000Cash flow from investment-12,303Dividends-2,078Change in net debt12,798FCF equity-5,492Balance sheet summary(CNYm)Intangible fixedassets3,468Tangible fixed assets37,077Current assets114,995Cash & others15,503Total assets191,810Operating liabilities39,845Gross debt64,908Net debt49,405Shareholders' funds77,945Invested capital100,191Ratio, growth and per share analysisYear to12/2024aY-o-y % changeRevenue-0.2EBITDA35.8Operating profit45.3PBT4.7HSBC EPS2.5Ratios (%)Revenue/IC (x)5.6ROIC10.0ROE9.5ROA5.2EBITDA margin2.7Operating profit margin2.2EBITDA/net interest (x)32.0Net debt/equity56.3Net debt/EBITDA (x)3.5CF from operations/net debt5.1Per share data(CNY)EPS reported (diluted)2.00HSBC EPS (diluted)2.00DPS0.70Book value22.56 Investor calltakeawaysCopper TC/RC andimpact onprofitability:DespitetheTC/RC contract feehavingdroppedtocUSD20/t in 1H25 (previously thecompany’sestimated breakeven point was cUSD30-35/t), thecompany is still able to make a profitfrom 1)thehigher recovery rate from its smelters (99.9%actual recovery rate vs contractual agreement of 96.3%);2) by-product sales (e.g. sulphuricacid);and 3) other metals recovered from the smelting process. Therefore, more smelters aremaking profits than the industry expectedat theendof 2024.TC/RC negotiation in 2H25:The current situation is unfavourable for smelters as copperminers finds that smelters are making profits from current contract price and the competitionbetween smeltingcapacityisfierce. Antofagasta’sfirst offer for 2H25 TC/RC contracts isalready negative (USD-15/