CICC has maintained its "outperform industry" rating on CGN Mining (01164), but lowered its target price by 36% to HK$3.07 due to rising US Treasury yields pressuring uranium stock valuations.
The new target implies 31.3x and 21.0x price-to-earnings ratios for 2026 and 2027, respectively, and offers roughly 50% upside from the current share price.
Taking into account short-term international trade losses and rising costs, the brokerage cut its net profit forecasts for 2026 and 2027 by 29% and 5% to HK$750 million and HK$1.11 billion.
The company released its operating report for the third quarter of 2026. CICC believes the drag on earnings from cross-period trade deliveries is gradually being removed, operations at its Kazakh uranium projects remain stable, and the company is poised to benefit from improving sentiment in the natural uranium sector.
Q3 2026 uranium output slightly beats plan
In the third quarter of 2026, the company's uranium output reached 642.4 tU, with a plan completion rate of 101.8%.
Xie company's natural uranium output was 160.5 tU, with a plan completion rate of 104%, of which the Xie mine produced 74.4 tU and the Yi mine produced 86.1 tU.
Ao company's natural uranium output was 481.8 tU, with a plan completion rate of 101%, of which the Zhong mine produced 406.7 tU and the Zha mine produced 75.2 tU.
Trading business profitable for two straight quarters, drag on earnings easing
In the third quarter of 2026, the company held 1,019 tU of natural uranium at a weighted average cost of US$82.2 per pound, and delivered 1,502 tU to customers during the quarter at a weighted average price of US$86.8 per pound, above the inventory cost of its natural uranium holdings.
In the first quarter of 2026, losses in the trading business weighed on profit; since the second quarter, the trading business has been profitable for two consecutive quarters, and the negative impact of cross-period international trade deliveries on earnings has been gradually lifted.
In terms of new contracts, purchases signed during the period totaled 746 tU at a weighted average cost of US$87.7 per pound, while sales signed reached 887 tU at a weighted average price of US$90.44 per pound, leaving new orders with good profit margins.
Strong sentiment supports higher long-term contract prices; uranium prices expected to resume uptrend
In September 2026, the long-term contract uranium price rose to US$96.5 per pound, while the spot price remained low at US$89.6 per pound.
The long-term contract price for natural uranium has broken through the near-20-year high of US$95 per pound set in 2008, reflecting historically strong supply-demand fundamentals, though the spot market remains subdued by tighter financial conditions and shows low activity.
CICC believes that with the downstream procurement peak season beginning and liquidity conditions improving, spot uranium prices are expected to resume their upward trend and converge toward long-term contract prices, and the company is set to benefit from the improving sentiment in the natural uranium sector.
Risk warning
Uranium mine supply could be released faster than expected; nuclear power development could fall short of expectations; sulfur costs could rise.
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