CGN MINING(HK:01164) Zhi Tong Cai Jing·2025-08-25 06:22Core Viewpoint - Zhongyin International maintains a buy rating for CGN Mining (01164), believing that the company's losses in the first half of the year are likely due to seasonal factors, which could restore investor sentiment. The company is viewed as a key beneficiary in the rising natural uranium price cycle. It is expected to announce its interim results after the market closes tomorrow [1]. Production Guidance - The most notable adjustment in the interim results of Huaneng Uranium is the downward revision of its nominal capacity for 2026 from 32,777 tons of uranium (85 million pounds) to 29,697 tons of uranium (77 million pounds), a 10% reduction. This approximately 3,000-ton reduction is primarily due to adjustments in the joint venture Budenovskove. The actual production will depend on negotiations with Huaneng's joint venture partners, signaling that the world's largest uranium producer is not prepared to restore full production at current market prices. The new guidance reflects that uranium mining companies are gaining greater bargaining power in pricing negotiations, with more tender activities occurring recently, which is rare for the summer period in previous years [2]. Infrastructure Readiness - The downward revision of the 2026 capacity guidance contrasts with the progress made in production infrastructure by Huaneng. The joint venture KATCO has launched a new processing plant with a capacity of 2,000 tons of uranium. Additionally, a new sulfuric acid plant has begun construction, expected to be operational by the second quarter of 2027. The company believes that the sulfur shortage issue has been largely resolved, with future challenges likely to be related to sulfur prices rather than supply [3]. Seasonal Sales Fluctuations - Despite a 13% year-on-year increase in total production, Huaneng's natural uranium sales volume for the first half of 2025 decreased by 2% to 7,625 tons of uranium due to customer delivery scheduling. Although Huaneng did not provide sales volume breakdowns at the joint venture and subsidiary levels, it is believed that seasonal factors may also be a reason for CGN Mining's profit warning for the first half of 2025. Given that Huaneng maintains its annual sales volume guidance of 17,500-18,500 tons of uranium, it is expected that sales volume will catch up in the second half of 2025 [4].