Summary of CMOC Group Ltd 3Q25 Management Call Company Overview - **Company**: CMOC Group Ltd (3993.HK) - **Industry**: Greater China Materials - **Market Cap**: US$51,519 million - **Stock Rating**: Overweight - **Price Target**: HK$18.60 - **Current Price (as of Oct 27, 2025)**: HK$17.04 - **Average Daily Trading Value**: US$47.9 million Key Points Copper Production - **Strong Performance**: The strong copper production volume for the first nine months of 2025 is attributed to sufficient power supply and upgrades in TFM technology starting from the third quarter [1][2] - **Future Expectations**: Production volume in the fourth quarter of 2025 is expected to be similar to that of the third quarter. Management does not anticipate large one-off copper sales in the fourth quarter of 2024 to recur this year [1][2] Growth Projections - **Future Growth**: Copper production volume is projected to continue growing year-over-year in 2026-2027, primarily driven by TFM upgrades and the commencement of KFM phase 2, expected to start in the first half of 2027. Official guidance will be provided in the FY25 annual report [2] Cobalt Production - **Export Quota**: CMOC is expediting procedures for cobalt export following the receipt of the export quota. However, limited external sales are anticipated in the fourth quarter of 2025 due to shipment time lag. Cobalt production outside the export quota will be stored and recorded at production cost [2] Production Costs - **Cost Trends**: Copper production costs saw a mild quarter-over-quarter decrease in the third quarter of 2025 and are expected to remain flat in the fourth quarter. The production cost of KFM phase 2 is projected to be no higher than that of phase 1 due to scale effects, allowing for shared facilities and employees [3] Taxation - **Effective Tax Rate**: The effective tax rate was lower quarter-over-quarter in the third quarter of 2025 due to a high base in the second quarter related to tax inspections. The windfall tax has not been triggered at current metal prices [3] Financial Metrics - **Earnings Projections**: - EPS (Rmb): 0.63 (FY24), 0.78 (FY25e), 0.96 (FY26e), 1.02 (FY27e) - EBITDA (Rmb million): 33,952 (FY24), 37,341 (FY25e), 43,722 (FY26e), 45,423 (FY27e) - ModelWare net income (Rmb million): 13,532 (FY24), 16,880 (FY25e), 20,738 (FY26e), 21,941 (FY27e) - P/E Ratio: 7.9 (FY24), 20.0 (FY25e), 16.3 (FY26e), 15.4 (FY27e) - P/BV Ratio: 1.5 (FY24), 4.1 (FY25e), 3.5 (FY26e), 3.1 (FY27e) - ROE (%): 22.7 (FY24), 23.8 (FY25e), 25.2 (FY26e), 22.8 (FY27e) - Dividend Yield (%): 3.1 (FY24), 1.6 (FY25e), 2.0 (FY26e), 2.5 (FY27e) [5] Risks - **Upside Risks**: - Metal prices in 2025 being stronger than expected - Copper output exceeding company guidance - **Downside Risks**: - Copper output falling significantly below guidance - Weakening cobalt prices due to low demand from industrials and domestic electric vehicles - Slow recovery of the global macroeconomy affecting metal prices [11] Additional Insights - **Valuation Methodology**: A DCF model is used with a WACC of 10.7%, assuming a 2% annual revenue growth beyond the explicit forecast period [8] - **Analyst Ratings**: The stock is rated as Overweight, indicating expected total returns to exceed the average total return of the industry coverage universe over the next 12-18 months [32] This summary encapsulates the key insights from the CMOC Group Ltd 3Q25 management call, highlighting production performance, future growth expectations, financial metrics, and associated risks.

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