Morgan Stanley released a research report stating that the preliminary 2025 results announced by MMG (01208) show its core profit performance is in line with expectations, and the company's operational fundamentals are improving. The firm maintained its "Overweight" rating and a target price of HK$10. MMG expects its 2025 core profit to reach between $700 million and $730 million, which aligns with the bank's forecasts. Following a provision for impairment of $280 million to $300 million related to the Kinsevere project, the full-year net profit is estimated to be between $500 million and $520 million. The primary reasons for the impairment include the local cobalt plant being under care and maintenance due to sales restrictions, unstable power supply, and uncertainties in the local fiscal policy. The report also noted that operations at MMG's other major mining areas remain stable, with the Las Bambas and Khoemacau mines continuing normal production. Supported by the fundamentals of tight global copper supply and a weaker US dollar, copper prices are expected to remain high, providing strong support for the company's overall profitability. The bank believes that, although short-term net profit is affected by the impairment, the company's core profitability is robust, and major operational challenges are being progressively addressed through financial provisions and tangible improvement measures, keeping the future profit growth trajectory clear. It maintains a positive view on MMG, expecting it to benefit from strong copper prices and improvements in its own operational efficiency.
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