Morningstar

Morningstar, Inc.

Equity Bottom-Up

We are dropping coverage of Zijin Mining. We provide broad coverage of more than 1,500 companies across more than 90 industry groups and adjust our coverage as necessary based on client demand and investor interest.

No-moat-rated Zijin Mining announced in early September that it has proposed a CNY 9.5 billion cash takeover of Canada-listed miner, Nevsun Resources and it will also acquire 63% of RTB Bor Group for USD 350 million. We think the move is in line with management’s guidance, given the budgeted CNY 12 billion spending for investment, merger and acquisition in 2018. These transactions are still subject to regulatory approvals and we do not expect them to significantly change our view on Zijin, given…

No-moat-rated Zijin Mining's first-half 2018 net profit of CNY 2.53 billion, up 68% year over year, was in line with the preliminary earnings announced in July and largely within our expectation. The strong growth was largely attributable to rising metal prices (such as copper and zinc), increasing production volume (copper and zinc), and lower foreign exchange losses. Our commodity price forecasts are unchanged but we increase our fair value estimate to HKD 2.96 (CNY 2.56) from HKD 2.76 (CNY…

No-moat Zijin Mining’s first-half 2018 net profit guidance of CNY 2.52 billion, up 68% year over year, is in line with our expectation. After fine-tuning our valuation model to take into account our foreign exchange and commodity price forecasts, we retain our fair value estimate of HKD 2.76 per share for H-shares, but we increase our fair value estimate for the A-shares to CNY 2.36 per share from CNY 2.20. The H-shares fair value estimate is unchanged as higher metal prices are offset by the…

No-moat Zijin Mining’s first-quarter 2018 net profit of CNY 1.1 billion was 8% higher year over year. Stripping out nonrecurring items, earnings surged significantly by 177% and beat our expectation due to higher-than-expected metal prices. We lift our earnings forecasts for 2018-19 by 10%-25% to factor in higher short-term commodity forecasts, but our long-term metal price estimates are unchanged. We increase our fair value estimate to HKD 2.76 (CNY 2.20) from HKD 2.28 (CNY 1.86). Despite the…

China

Zijin Mining Group Co., Ltd., through its subsidiaries, explores, mines, produces, refines, and sells gold and other mineral resources in China.