Bank of America Securities: Raises MMG (01208) target price to HK$12, strong performance in the first half of the year.

Bank of America Securities released a research report stating that MMG (01208) showed strong performance in the first half of the year, with all major indicators performing exceptionally well. During this period, revenue increased by 61% year-on-year to $4.54 billion, while net profit attributable to shareholders reached $899 million, a significant increase of 164% compared to the previous year, exceeding the bank's expectations and accounting for 54% of the market's forecast for the full fiscal year 2026. Considering the stronger-than-expected performance in the first half and substantial improvements in the balance sheet, the bank raised its earnings forecasts for 2026 to 2028 by 16% to 22%, adjusting the target price from HK$10.5 to HK$12, while reaffirming the "Buy" rating. The robust profitability was supported by increased sales, rising prices for copper and by-products, and lower C1 cash costs, driving EBITDA up to $2.73 billion, a 77% year-on-year increase. Among them, the Las Bambas project contributed approximately $2.25 billion to EBITDA. Copper output in the first half increased by 3% year-on-year to 266,500 tons, which represents 52% of the full-year production guidance for fiscal year 2026. Based on Las Bambas's C1 cash cost of only $0.55 per pound in the first half, management has lowered the 2026 fiscal year's C1 cost guidance from the previous range of $1.20 to $1.40 per pound to a new range of $0.85 to $1.05 per pound. The balance sheet improved significantly, with net debt dropping sharply from $3.35 billion at the end of 2025 to $608 million, and the net debt ratio improving from 33% to just 6%. Cash increased by $2.8 billion, primarily benefiting from $2.23 billion in operating cash flow and approximately $1.6 billion raised through the issuance of convertible bonds and rights issues in June. However, the group did not declare an interim dividend. Bank of America Securities indicated that the fundamentals of copper supply and demand continue to improve, as the production of the worlds top 15 copper miners fell by 5% year-on-year in the first half, coupled with tightening scrap copper supply on the mainland. Refined copper output in July was 4% lower than the initial forecast for the year, while investment in power grids grew by 13% year-on-year. Due to limited supply flexibility, the bank is optimistic about the outlook for copper prices.