The latest: China Molybdenum Co. Ltd. (CMOC) (3993.HK; 603993.SH) released a positive earnings alert Thursday, estimating net profit after deduction of non-recurring gains and losses for the first half of 2022 was between 3.292 billion and 3.559 billion yuan ($4.91 billion to $5.31 billion), an increase of 135% to 154% year-on-year.
Looking up: The main reasons for the significant increase in estimated net profit include the timely commissioning of production expansion and technology improvement projects, which resulted in a 17.2% to 47.9% year-on-year increase in production of key products, such as copper, cobalt and niobium, as well as higher sales prices.
Take Note: Looking at the company’s first quarter financial report, its net profit after deduction of non-recurring gains and losses was 1.68 billion yuan, up 234% year-on-year, much higher than the 135% to 154% rise in the first half of the year, implying that its profit growth may have slowed down as it entered the second quarter.
Digging Deeper: Though its name includes the word “molybdenum,” CMOC’s main business is cobalt and copper mining. As the main component of new energy batteries, cobalt benefits from the great increase in demand for electric vehicles, and the price of cobalt has more than doubled since 2020, which benefits the CMOC’s performance. However, as cobalt is in short supply and has become a strategic resource for large countries, the company has started to face resistance in recent years to acquiring mineral properties in Africa with a large amount of cobalt resources, due to the ongoing political tug-of-war between China and the U.S.
Market Reaction: CMOC edged up about 1% on Friday opening, but then trended downward to drop 2.7% to HK$3.67 at the midday break, close to its 52-week low.
Translation by Jony Ho
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