Pengxin Resources: Production and Sales of Copper Cathode and Other Products Increased, Cobalt Hydroxide Prices Rebounded, Q1 Net Profit Expected to Reach 100 Million to 130 Million

Pengxin Resources' stock price surged on April 10, hitting the daily limit multiple times during the session. As of 11:08 AM on April 10, Pengxin Resources rose 9.62% to 3.76 yuan per share.

On the news front, Pengxin Resources disclosed its Q1 2025 earnings forecast on the evening of April 9: preliminary estimates by the finance department indicate that the company expects to achieve a net profit attributable to the parent company's owners of 100 million to 130 million yuan, an increase of 71.9033 million to 101.9033 million yuan compared to the same period last year. The company also expects to achieve a net profit attributable to the parent company's owners after deducting non-recurring gains and losses of 102 million to 132 million yuan, an increase of 113.3336 million to 143.3336 million yuan compared to the same period last year.

Regarding the reasons for the expected profit, Pengxin Resources stated: During the reporting period, the company's production and sales of products such as copper cathode increased, and the price of cobalt hydroxide rebounded, leading to the reversal of impairment provisions on existing cobalt hydroxide inventory from previous years.

Pengxin Resources previously disclosed its 2024 earnings forecast, which showed an expected net loss attributable to the parent company's owners of 85 million to 125 million yuan, compared to a loss of 108 million yuan in the same period last year. The net loss after deducting non-recurring gains and losses is expected to be 146 million to 186 million yuan, compared to a loss of 113 million yuan in the same period last year. Regarding the main reasons for the expected loss, Pengxin Resources stated: In 2024, the company's loss was mainly due to the impact of its operations in the DRC, with the primary reasons as follows: 1. Due to insufficient ore supply in the DRC in H1 and local power rationing, the production and sales of copper cathode decreased, leading to a reduction in gross profit. Ore supply returned to normal in H2. 2. To alleviate the shortage of copper ore supply, the production line utilized some of the company's own low-grade, high-calcium ore, resulting in increased consumption of self-produced sulfuric acid for copper cathode production and reduced sales of sulfuric acid. Additionally, due to intensified market competition, the selling price of sulfuric acid decreased, leading to a reduction in gross profit from sulfuric acid sales. 3. Due to the fluctuating decline in the market price of cobalt hydroxide, the company made corresponding impairment provisions on related inventory.

Data shows that Pengxin Resources' main business is the exploration, mining, smelting, and processing of metal resources such as gold, copper, cobalt, and other metal minerals, as well as related product sales.

Regarding the future of copper prices, many institutions have recently shared their views:

UBS analysts provided insights into the potential trajectory of copper prices, noting that prices may temporarily drop to $8,000/mt, echoing historical patterns where prices fell about 25% to 30% from their 12-month peak. Despite an increase in speculative long positions on the LME, with net long positions rising by 45,600 lots since the beginning of the year, UBS expects any pullback in copper prices to be short-lived. The bank highlighted several factors supporting copper prices recently. One of these is the expectation of more accommodative global monetary policies, with the US Fed expected to cut interest rates to counter slowing economic growth and boost asset prices. UBS also noted that supply-side challenges are expected to persist in the short term, which should push prices higher, thereby encouraging investment in mine supply capacity. This outlook takes into account the possibility of increased stimulus measures and current supply dynamics.

Goldman Sachs expects copper prices to fall to a monthly average low of $8,300/mt in Q3 2025, forecasting a global copper market surplus of 100,000 mt (previously a deficit of 180,000 mt).

Citi revised its 2025 nickel price forecast down to $15,500/mt from $16,000/mt, its 2025 zinc price forecast down to $2,630/mt from $2,750/mt, its 2025 aluminum price forecast down to $2,480/mt from $2,615/mt, and its 2025 copper price forecast down to $8,860/mt from $9,100/mt.