Core Viewpoint - Minmetals Copper's operational stability is highlighted, with expectations for the second phase of the Mirador copper mine to commence production, which will enhance self-sufficiency in copper supply [1] Group 1: Operational Performance - The smelting segment has experienced a significant decline in profits due to a sharp drop in copper processing fees, but the impact is limited as the profit decline is much smaller than the decrease in processing fees, likely due to contributions from by-products [1] - Jinlong Copper achieved a net profit of 323 million yuan in H1 2025, a year-on-year decline of 30%, while Chifeng Jincopper reported a net profit of 190 million yuan, down 36% year-on-year [1] - The resilience in smelting profits is attributed to the gross profit margin of chemical and other products, which reached 55.04%, an increase of 39.05 percentage points year-on-year [1] Group 2: Industry Chain Development - The Mirador copper mine's integration is complete, with expected self-produced copper output reaching 155,000 tons in 2024, and the second phase project set to launch in 2025, further enhancing self-sufficiency [1] - The copper-based new materials project is progressing steadily, with smelting capacity expected to increase, benefiting from transportation and location advantages, placing smelting costs on the lower end of the cost curve [1] - The annual production capacity for copper foil is 80,000 tons, indicating ongoing integrated development within the copper industry chain, with steady capacity construction and promising future increments from the Mirador copper mine's second phase [1]

Investment Rating - The report maintains a "Recommended" rating for the company, indicating a potential upside of over 15% relative to the benchmark index [6][4]. Core Views - The company reported a revenue of 76.08 billion yuan for the first half of 2025, a year-on-year increase of 6.39%, while the net profit attributable to shareholders decreased by 33.94% to 1.441 billion yuan [1]. - The copper price remained stable, but the spot TC (treatment charge) significantly decreased, while sulfuric acid prices surged [2]. - The company’s smelting profits showed resilience, primarily due to contributions from by-products, despite a notable decline in copper processing fees [2]. - A one-time tax expense adjustment led to a significant drop in reported profits, but the underlying operational performance remains stable when adjusted [3]. - The company is focused on strengthening its copper industry chain, with the Mirador copper mine's second phase expected to enhance self-sufficiency and production capacity [3]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 40.858 billion yuan, reflecting a 5.33% year-on-year increase and a 16.00% quarter-on-quarter increase. However, the quarterly net profit dropped to 312 million yuan, a decrease of 71.23% year-on-year [1]. - The company’s net profit forecast for 2025-2027 is projected to be 3.789 billion yuan, 4.694 billion yuan, and 5.715 billion yuan, respectively, with corresponding PE ratios of 14x, 12x, and 10x [4][5]. Market Conditions - The average price of electrolytic copper in Q2 2025 was 77,000 yuan/ton, showing a slight increase from Q1 2025, while the average price of sulfuric acid rose significantly [2]. - The copper concentrate TC spot index averaged -8.68 and -40.67 USD/ton in Q2 and Q1 2025, respectively, indicating a substantial year-on-year decrease [2]. Strategic Outlook - The company is advancing its copper-based new materials project and expects to enhance smelting capacity, benefiting from its geographical advantages [3]. - The Mirador copper mine is projected to produce 155,000 tons of copper in 2024, with further increases expected upon the completion of the second phase in 2025 [3].