“Mainstream” — Bank of America cuts Zijin Gold International (02259.HK) target price to HK$140; profit warning beats expectations

Bank of America Securities said in a report that Zijin Mining International (02259.HK) -1.400 (-1.404%) had short interest of $300 million, with a ratio of 43.129%. It issued a profit alert, expecting first-half 2026 net profit of about $1.4 billion, representing a 169% year-on-year increase, but only equivalent to 44% and 38% of the bank’s and the market’s full-year forecasts, respectively, resulting in performance below expectations. The bank estimates that standalone net profit for the second quarter was $593 million, up 67% year on year and down 27% quarter on quarter. The bank believes the underperformance versus expectations was mainly due to unit costs higher than expected and a slower-than-expected pace of production ramp-up.

Management said the weaker performance in the first half was mainly driven by higher energy costs and one-off expenses at the RG mine; production increasing non-linearly because multiple mines are in integration and expansion stages; and factors such as weather disruptions. In terms of production, gold output in the first half was 27 tonnes, equivalent to 46% of the 59-tonne full-year production guidance. Management remains confident in achieving the full-year guidance. The bank expects second-half earnings to be broadly in line with the first half, as the gold price forecast was cut to $4,075 per ounce (down 13% for the first half), which will be offset by production increases supported by continued production ramp-ups at Akyem and the RG mine.

Related content 《Big Banks》JPMorgan: China materials sector profit alerts look promising; prefers copper and gold stocks

To reflect the underperformance in first-half results, Bank of America lowered its 2026 and 2027 net profit forecasts by 6% to $3.0 billion and $3.2 billion, mainly due to higher unit cost assumptions. Based on unchanged assumptions of an 8% weighted average cost of capital and a 2% terminal growth rate, it also lowered its target price by 11%, from HK$158 to HK$140. The bank reiterated a “Buy” rating, believing the company can benefit from visible production growth from 2026 to 2027, as well as the potential for unit cost normalization after newly acquired assets begin production and after the one-off RG mine expenses fade. (da/u)(Hong Kong stock quotes are delayed by at least fifteen minutes. Short-selling data are as of 2026-07-10 16:25.)