JP Morgan: Initiates coverage of MMG (01208) with a "overweight" rating and a target price of HK$13.

JP Morgan issued a research report stating that MMG (01208) was initiated with a "hold" rating, with a target price of HK$13 by December 2027. The bank pointed out that MMG is a highly pure copper industry stock, with nearly 90% of its gross profit related to copper in 2025, possessing the highest profit sensitivity to copper prices among its peers. Although the company's stock has underperformed its international peers this year, the bank has a positive outlook on the future of copper prices and expects the valuation gap between Chinese copper stocks and international peers to narrow, providing MMG with further potential for valuation reevaluation. JP Morgan predicts that due to the improvement in fixed cost absorption capacity and substantial deleveraging, MMG's profit conversion ability will significantly strengthen. The company's total debt has decreased from $4.6 billion in the 2024 fiscal year to $3.3 billion in the 2025 fiscal year, and interest expenses are expected to decrease by 26% to $215 million. The bank forecasts that MMG's net profit compound annual growth rate between 2025 and 2028 could reach 52%, with net profit in the 2026 fiscal year expected to reach $1.6 billion, a significant increase of 216% year-on-year. Additionally, the bank mentioned that MMG's Peruvian Las Bambas copper mine has entered the longest stable operational period in history since March 2023; and the second phase expansion of the Khoemacau project in Botswana is expected to start production in the first half of 2028, doubling its annual production capacity to 130,000 tons, becoming a mid-term growth engine. With continued improvement in the balance sheet, the opportunity for MMG to resume dividend payouts is steadily increasing, potentially becoming a catalyst for stock price reevaluation.