What changed in third-quarter results?

  • CMOC’s net profit attributable to shareholders was 7.87 billion yuan in the third quarter of 2026, up 40% year on year and down 6% quarter on quarter, broadly in line with Bank of America’s expectations. Attributable net profit for the first three quarters was 24 billion yuan, up 68% year on year; revenue was 207.3 billion yuan, up 42% year on year.
  • Bank of America estimates that copper contributed approximately 73% of third-quarter segment profit, making it the main source of earnings; molybdenum and mineral products trading each accounted for approximately 6%, tungsten and gold each accounted for approximately 4%, and cobalt made a small contribution.

Why did unit profit continue to expand despite rising copper costs?

  • Third-quarter copper production was approximately 209 thousand tonnes, a quarterly record, and remained above 200 thousand tonnes per quarter. Copper production for the first three quarters was 597 thousand tonnes, up 9.8% year on year; sales were 567 thousand tonnes, up 9.0% year on year.
  • Bank of America estimates that rising sulfur and diesel prices pushed third-quarter unit copper costs up to 45 thousand yuan per tonne; the effect of higher copper prices was stronger, raising unit profit quarter on quarter to 58 thousand yuan per tonne.
  • Copper revenue for the first three quarters was 52.4 billion yuan, up 36% year on year; the copper business’s gross margin was 60.5%, up 6.4 percentage points year on year.

Why did profit growth not bring a corresponding increase in cash flow?

  • Operating cash flow for the first three quarters was 13.5 billion yuan, down 15% year on year. Compared with an inflow of 16.3 billion yuan in the first half, the third quarter saw an outflow of approximately 2.8 billion yuan.
  • Bank of America said the quarterly outflow came mainly from increased working-capital outflows in the base-metals trading business. The funds tied up in trading caused overall operating cash flow to diverge from profit growth in the same period.

How did cobalt and other businesses contribute to earnings?

  • Cobalt production for the first three quarters was 99.7 thousand tonnes, up 13.3% year on year, but sales were only 12.7 thousand tonnes, down 75% year on year and well below production. Third-quarter sales were approximately 7000 tonnes, above the 3700 tonnes in the second quarter.
  • Despite a decline in recognised cobalt sales, the cobalt business’s gross margin for the first three quarters rose 10.5 percentage points year on year to 74%; Bank of America nevertheless estimates that its contribution to third-quarter segment profit was small.
  • The acquired Brazilian gold asset produced 161 thousand ounces of gold since consolidation, implying approximately 61 thousand ounces in the third quarter; the business generated revenue of 4.7 billion yuan and a gross margin of 38%.

What supports Bank of America’s buy rating?

  • Bank of America maintained its buy ratings on the A-shares and H-shares, with a target price of 22 Hong Kong dollars for the H-shares and 24 yuan for the A-shares. The bank is optimistic about copper prices and sees the capacity ramp-up in 2027 of KFM’s second-phase project, which has annual copper production capacity of 100 thousand tonnes, as a support for growth.
  • Bank of America’s copper price assumptions for 2026 and 2027 are 12.9 thousand US dollars and 15.2 thousand US dollars per tonne, respectively; a decline in metal prices or slower construction progress at the TFM and KFM projects would affect this growth thesis.