Orient: Geopolitical disturbances are increasing, optimistic about the continued prosperity of mining machinery.

Orient releases research report that the center of metal prices is expected to remain high under the background of geopolitical conflicts, global mining giants continue to increase mergers and acquisitions to expand reserves, and the willingness of mining companies to expand production in the future is expected to strengthen. This will drive mining companies' capital spending to remain high for a longer period of time, and promote a high level of prosperity in the mining machinery industry. The broad prosperity of the mining machinery industry has three stages, including bulk raw material development, energy extraction, and construction utilization, and the industry is currently believed to be in the first stage. The equipment companies related to this stage are expected to benefit from the increasing prosperity of the mining machinery industry. Orient's main points of view are as follows: Global geopolitical disturbances are escalating, and the continued prosperity of the mining machinery industry is still optimistic. The current consensus in the market is that the prosperity of the mining machinery industry mainly benefits from future rate cuts by the Federal Reserve, but the conflict between the US and Iran has caused a rise in global oil prices, weakening expectations of future rate cuts by the Federal Reserve, therefore the sustainability of investment in mining machinery is weak. The bank believes that the sustainability of this round of investment in mining machinery is strong, due to the difference between the prosperity of this round and previous cycles, and the more critical factor lies in the intensification of global geopolitical disturbances under the background of deglobalization. Global mining giants continue to increase mergers and acquisitions to expand reserves, and the willingness of mining companies to expand production in the future is expected to strengthen. This will drive mining companies' capital spending to remain high for a longer period of time and promote a high level of prosperity in the mining machinery industry. Under the background of geopolitical conflicts, the prosperity of the mining machinery industry will last longer. The bank believes that the increase in global security demands worldwide will be a core driving force for raising global inflation, and the center of metal prices is expected to remain high. The bank sees strong demand for gold investment and central bank gold purchase, and short-term price fluctuations do not change the economics of gold mining. Future market awareness of copper supply shortages is expected to increase, and the bank believes that the US will not end its copper hoarding in the short term. As the geopolitical conflicts intensify, the importance of strategic minor metal mineral resources continues to be highlighted. On the supply side, the bank sees that mergers and acquisitions in the mining industry in 2025 reached the strongest year since the super cycle of 2010-2012, and the willingness of mining companies to expand production in the future is expected to strengthen. The bank believes that with high prices for gold, copper, and strategic minor metals, there is still room for more expansion for global mining enterprises, and future global mining capital expenditures have room for growth, bringing longer-lasting prosperity to the mining machinery industry. Under the trend of self-control and autonomy of the resource supply chain, there is a large room for growth for the market share of domestic mining machinery. Chinese mining machinery has a low global market share in mining equipment. According to the 2025 Jakarta Global Top 50 Mining Equipment Manufacturers List, the top five global mining machinery companies are Caterpillar, Komatsu, Sandvik, Atlas Copco, and Metso, all of them are foreign companies. In 2025, the combined sales of these five companies amounted to approximately $42.2 billion, with a CR5 of approximately 55%. Thirteen Chinese companies including Tiandi Science & Technology, ZCZL Industrial Technology Group, and XCMG Construction Machinery made it to the list. The combined sales of Chinese companies in 2025 were approximately $14.725 billion, accounting for only 19.21% of the total. With global geopolitical risks escalating and higher demands for self-control of the resource supply chain, as domestic mining companies actively expand internationally, the bank believes that domestic mining machinery has competitive advantages in terms of cost-effectiveness, electrification, etc., and there is still a large room for growth in the global market share of domestic mining machinery. Risk warning: Macro-economic fluctuations leading to investments falling short of expectations, mining companies' capital expenditures falling short of expectations, and mining project progress falling short of expectations.