The analyst rating for CMOC (03993.HK) is a "Buy" based on several factors outlined in the Jefferies research report. The key reasons for this rating include:
1. Successful Acquisition: CMOC completed the acquisition of Equinox Gold's gold asset portfolio in Brazil for up to approximately US$1 billion, which is expected to enhance its gold production capabilities.
2. Implied Gold Price Analysis: Jefferies' net asset value analysis indicates an implied gold price of about US$3,320 per ounce, which is significantly lower than the current spot gold price of over US$5,000. This suggests potential undervaluation and upside for CMOC's gold assets.
3. Long-term Production Targets: Jefferies anticipates that the projects in Brazil and Ecuador will achieve nearly 20 tons of annual gold production once fully ramped up. This increase in production is expected to contribute significantly to CMOC's gross profit.
4. Growth in Gold Contribution: It is estimated that gold will account for 5-6% of CMOC's gross profit in 2026, with projections of rising to over 10% by 2030. The management's goal to double gold output by 2030 through mergers and acquisitions further supports the growth outlook.
5. Target Prices: Jefferies has set target prices of $25.9 for H-shares and RMB26.7 for A-shares, indicating a positive outlook for the stock's performance.
Overall, the combination of strategic acquisitions, favorable market conditions for gold, and strong production growth prospects underpins Jefferies' "Buy" rating for CMOC.
