MMG LTD(1208.HK)：EXPECT RAPID EARNINGS GROWTH IN 2026 DESPITE MILD OUTPUT GROWTH

Core Viewpoint - MMG Limited is expected to experience strong earnings growth driven by rising metal prices, despite a forecasted mild output growth in 2026 for copper and a decline in zinc output [1][3]. Group 1: Output Performance - In 2025, MMG Limited's total copper output increased by 27% year-over-year (YoY) to 506.9k tonnes, primarily due to a 27% YoY growth at Las Bambas, reaching 410.8k tonnes, supported by improved milled ore grade and recovery rate [1]. - Zinc output grew by 6% YoY to 232k tonnes in 2025, with Dugald River's output rising 12% YoY to a record 183.5k tonnes, attributed to a 15% YoY increase in milled volume and enhanced efficiency [1]. Group 2: Future Guidance - For 2026, the company anticipates a 3% YoY growth in copper output, mainly from Kinsevere and Khoemacau, while projecting a 3% YoY decline in zinc output [2]. - The expected copper output at Las Bambas for 2026 is estimated to be 400k tonnes [2]. Group 3: Earnings Forecast - Despite no output growth in 2026, the company's earnings per share (EPS) is projected to increase by 1.1 times YoY, following a significant 3.7 times YoY increase in 2025, driven by rising metal prices [3]. - The average prices for copper, gold, and silver are expected to surge by 24% YoY, 40% YoY, and 100% YoY respectively in 2026, benefiting the company as gold and silver are by-products of its mining operations [3]. - The company is also expected to sell 20k tonnes of copper stockpiled at Las Bambas in 2026 and resume cobalt sales at Kinsevere [3]. Group 4: Valuation - The target price for MMG Limited has been raised from HK$10.25 to HK$11.90, reflecting increased earnings forecasts, with the new target price corresponding to a 9.9 times 2026 estimated price-to-earnings ratio [4].