Daily Brief Equity Bottom-Up: 2026 High Conviction Idea: Zijin Mining – Copper Scarcity Rerating to HK$48 and more

• Structural copper tightness, strong gold cash flows, and rising silver prices position Zijin for multi-year earnings growth and a valuation re-rating in 2026.
• Leadership transition reduces founder dependence, strengthens governance credibility, and enables multiple expansion as Zijin aligns with global copper-scarcity peers.
• Base valuation is HK$40–41; spot and peer convergence support HK$48–50, implying 35–40% upside with clear catalysts across copper expansions and gold stability.

• Fenix Resources (FEX AU) presented a 3-year production plan, with iron ore shipments growing from 2.4 million tons in FY25 to 5.7 million tons in FY28 (midpoint guidance).  
• The company upgraded its FY26 production guidance to 4.2-4.8 million tons (from earlier 4.1 million tons), while maintaining its cash costs in the 70-80 AUD/ton range (C1 cash costs).  
• A feasibility study has commenced, which will take Fenix Resources (FEX AU) into the 6-10 million range from FY29—more details in a management conference call on 15th December. 

• Rising memory prices are significantly increasing Switch 2 hardware costs, threatening margin compression below expectations and undermining management’s prior guidance on maintaining stable profitability levels.
• Even with potential price hikes, higher ASPs may dampen unit demand, reducing operating leverage and forcing consensus earnings cuts across FY3/27–28 as hardware profitability deteriorates.
• Valuation remains stretched relative to historical norms, leaving limited downside protection if earnings reset lower and increasing vulnerability to sentiment reversals amid uncertain cost trajectories.

• Recent developments materially improve the setup: H200 clarity reduces a major sector overhang and removes uncertainty around chip supply, clearing the way for continued AI-infrastructure expansion in China.
• 3Q25: VNET’s strong result, 2026 outlook, advantaged power resources, and shareholder priorities (no equity dilution and defined leverage limits) reduce downside bottoms-up risk while increasing confidence on execution
• None of this is reflected in today’s valuation. With 25–30% EBITDA CAGR and improved visibility on demand and execution, VNET is positioned for a material 2026 re-rating, implying 60-100% upside.

• The U.S. Navy just signed a $448 million contract with Palantir Technologies to overhaul how it maintains and repairs nuclear submarines.
• This partnership centers on “Ship OS,” a new AI-driven logistics platform built by Palantir.
• It aims to digitize and streamline the Navy’s sprawling and often outdated maintenance and supply chain processes.

• Flagright is an AI-native, no-code Anti-Money Laundering (AML) compliance and fraud prevention platform targeting fintechs, banks, and other financial institutions.
• The company’s key differentiator is its use of generative AI and AI agents to automate compliance workflows, significantly reducing false positives and operational costs for its clients.
• Having raised a total of $7.6 million in funding, Flagright is in a growth phase, expanding its product suite and global presence, particularly in North America and Europe.

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• Hana Microelectronics is a leading independent Electronics Manufacturing Service (EMS) provider in Southeast Asia with a diversified manufacturing footprint across Thailand, China, the US, Cambodia, and South Korea.
• The company is strategically positioned to benefit from long-term secular growth trends in the semiconductor industry, including the increasing electronic content in automobiles (especially EVs), the proliferation of IoT devices, and the rollout of 5G technology.
• While facing near-term headwinds from sluggish demand in certain segments and foreign exchange volatility, the company’s investment in high-growth areas like Silicon Carbide (SiC) power semiconductors and Radio Frequency Identification (RFID) presents significant future growth opportunities.

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Borussia Dortmund is one of Europe’s leading football clubs, with a strong track record in its domestic league and an enviable consistency in competing in the financially lucrative European competitions. The consistent on-pitch success and structural growth drivers of expanding global audiences, increasing demand for media rights and developing sponsorship partners have led to a strong 20-year revenue CAGR of c 10%. When combined with management’s conservative approach to operating costs and player investment, the result is a long-term record of positive net income and free cash generation, which may be at odds with the general perception about the financial health of football clubs. The company’s valuation looks attractive versus peers and its own trading history.

Canyon Resources confirmed it remains on track to commission the Minim Martap bauxite project in line with previous expectations, as Cameroon returns to ‘business as usual’ following the presidential elections. It continues to aim for first production in early 2026 and first shipment around mid-2026. The company remains well capitalised, having completed a first tranche of the A$205m funding package, with the remainder expected to close in Q1 CY26. We maintain our project level valuation of A$735m, which adjusted for corporate overheads and pro forma net cash implies a value of A$0.35/share, before accounting for the project’s vast residual resource.

• SK Inc. operates as the holding company for South Korea’s SK Group, a major conglomerate with a diversified portfolio spanning energy, telecommunications, semiconductors, chemicals, and biopharmaceuticals.
• The company is strategically focused on four key growth areas: advanced materials, green energy, biopharmaceuticals, and digital technologies, actively investing to secure future growth engines.
• As a holding company, its financial performance is closely tied to the performance of its major subsidiaries, including SK Hynix, SK Innovation, and SK Telecom, making it a proxy for the broader South Korean industrial landscape.

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