WESTERN MINING(601168)：EARNINGS GREW STEADILY IN 1–3Q25; EXISTING AND NEW PROJECTS TO DRIVE GROWTH

　　Results Review
　　3Q25 results largely in line with our expectationsWestern Mining announced its 1–3Q25 results: Revenue rose31.9% YoY to Rmb48.4bn and net profit attributable toshareholders rose 7.8% YoY to Rmb2.9bn. In 3Q25, revenuerose 43.2% YoY and 11.6% QoQ to Rmb16.8bn, and attributablenet profit fell 3.2% YoY and rose 1.4% QoQ to Rmb1.1bn.
　　Sales volume and prices of main metals rose; earningsgrew steadily in 1–3Q25. The firm’s output of mined copper,molybdenum, lead, and zinc increased 1%, 18%, 21%, and 20%YoY to about 137,670t, 3,516t, 50,118t, and 94,830t in 1–3Q25,completing 82%, 88%, 76%, and 76% of the full-year plans. TheYulong copper mine produced about 129,709t of copper in 1–3Q25, up 3% YoY. According to iFinD, domestic average pricesof copper, molybdenum, lead, and zinc were up 4%, up 7%,down 2%, and up 1% YoY in 1–3Q25.
　　Higher copper and molybdenum prices offset QoQ outputdecline in 3Q25; quarterly earnings fell slightly YoY due toasset impairment provisions. The firm’s output of minedcopper, molybdenum, lead, and zinc in 3Q25 was -9%, -5%,+13%, and +23% YoY, and -4%, -22%, -18%, and -3% QoQ.
　　According to iFinD, domestic average prices of copper,molybdenum, lead, and zinc in 3Q25 were +6%, +16%, -6%,and -5% YoY, and +2%, +20%, +0%, and +0% QoQ. In 3Q25,the firm made provisions for asset impairment losses ofRmb137mn, up Rmb140mn YoY.
　　Trends to watch
　　Chating mine to increase resource reserves; existing andnew projects to drive growth. The firm is steadily advancingthe Yulong copper mine’s 30mnt capacity expansion project andShuangli Mining’s iron ore mine conversion and expansionproject. We estimate that after the completion of Yulong PhaseIII, the firm’s equity annual copper concentrate productioncapacity will increase 17% compared with 2024. On October 23,　　the firm’s subsidiary Yulong Copper won the exploration right forthe Chating copper-polymetallic mine for Rmb8.6bn. Accordingto corporate filings, the mine’s proven reserves include 656,700tof industrial-grade copper metal (grade 0.54%), 1.09mnt of lowgradecopper metal (grade 0.24%), and 248t of gold metal(grade 0.43g/t). The Chating mine has great potential forprospecting in the depths, and its resource volume reaches thesize of large copper-gold deposits. The increase in resourcereserves lays the foundation for production expansion.
　　Financials and valuation
　　Given rising copper and molybdenum prices, we raise our 2025and 2026 earnings forecasts 11.6% and 21% to Rmb3.83bn andRmb4.48bn. The stock is trading at 15.0x 2025e and 12.8x2026e P/E. We maintain an OUTPERFORM rating. As earningsforecasts are raised and increased copper resources boost thefirm’s long-term growth potential, we lift our target price 50.6%to Rmb28.16, implying 17.5x 2025e and 15x 2026e P/E andoffering 17.1% upside.
　　Risks
　　Falling metal prices; slower-than-expected progress of projects;disappointing improvement in smelting.
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