CICC has released a research report expressing optimism regarding Jiaxin International Resources' (03858) expansion at the Bakuta project and its potential for growth in developing nonferrous resources in Central Asia. The firm maintains an Outperform rating. Considering earnings adjustments and Hong Kong stock market liquidity, CICC raised its target price by 67% to HK$158.3. This corresponds to 2026/2027e P/E ratios of 18.0x and 10.9x, implying a 52% upside potential. Net profit attributable to shareholders for 2026-2027e was revised upwards by +110%/+122% to HK$4.01 billion and HK$6.64 billion, respectively. The current share price implies 2026/2027e P/E ratios of 11.8x and 7.1x.
The main points from CICC are as follows:
The company's 2025 results slightly exceeded CICC's expectations. Jiaxin reported its 2025 performance, achieving a historic milestone by returning to profitability for the first time. Revenue and gross profit were HK$1.06 billion and HK$520 million, respectively, with a gross margin of 49%. Net profit attributable to shareholders was HK$310 million. The better-than-expected performance was driven by the successful ramp-up of tungsten concentrate production and strong tungsten prices.
The global tungsten supply-demand balance remains tight. As of the end of March 2026, the year-to-date average price for tungsten concentrate was RMB 730,000 per tonne, with current prices approaching approximately RMB 1 million. CICC forecasts tungsten concentrate prices to reach RMB 800,000 and RMB 900,000 per tonne in 2026 and 2027, respectively.
The Bakuta Tungsten Mine commenced Phase I commercial production in April 2025, becoming one of the first major global supply expansion projects to achieve profitable output. In 2025, the company's tungsten ore mining and processing volume reached 2.8 million tonnes, with tungsten concentrate production and sales of 5,008 tonnes and 4,879 tonnes, respectively, demonstrating its growing scale. The average selling price for its tungsten concentrate was RMB 196,000 per tonne (excluding tax), close to the domestic average price from April to December 2025. On costs, CICC estimates the full pre-tax cost of tungsten concentrate for the full year was HK$139,000 per tonne. Benefiting from increased volume, favorable prices, and cost control, net profit attributable to shareholders reached HK$310 million, turning positive year-on-year for the first time.
Regarding cash flow, the company's operating cash flow turned positive historically, while financial leverage improved significantly. In 2025, net cash flows from operating, investing, and financing activities were +HK$510 million, -HK$110 million, and +HK$580 million, respectively. The asset-liability ratio was 55%, a significant decrease of 46 percentage points year-on-year.
The company is progressing with the construction of Phase II at Bakuta. Upon completion, annual ore processing capacity is expected to increase by 50% compared to Phase I. Jiaxin plans to advance the construction of an ore sorting system, to be integrated into the existing mining process from 2027 onwards. This could increase annual ore processing capacity to 4.95 million tonnes, a 50% increase from the Phase I level of 3.3 million tonnes. After completion, the company expects long-term annual tungsten concentrate production capacity to exceed 10,000 tonnes, reinforcing Bakuta's position as the world's largest open-pit tungsten mine.
The management team's complementary strengths, combined with increasingly robust cash flow, are expected to support the company's further development of nonferrous resources in Central Asia. As of the end of 2025, the three major shareholders—Hengzhao International, Jiangxi Copper, and China Railway Construction—held stakes of 31.3%, 30.1%, and 10.8%, respectively. CICC believes the company stands to benefit from flexible decision-making mechanisms and the substantial industrial capabilities of its state-owned and central enterprise shareholders.
Risk warnings include the company's production falling short of expectations, insufficient downstream demand, and significant fluctuations in tungsten prices.
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