Key Takeaways:
Morgan Stanley maintained its “Overweight” rating and HKD 215 price target on Zijin Gold International (02259.HK) after the company posted a first-quarter net profit of $801 million.
"The performance was below the bank’s expectations but above market consensus," Morgan Stanley said in a research report. The bank noted that the solid profit figure came despite some operational headwinds.
Zijin’s first-quarter profit grew from $696 million in the fourth quarter of 2025. However, gold production fell to 13.46 tonnes from 14.82 tonnes over the same period, which the bank suggested could be related to seasonal factors. All-in sustaining costs (AISC) rose to $1,638 per ounce, a notable increase from the $1,501 average in fiscal year 2025.
The stock rating holds firm as higher gold prices help offset weaker production and rising costs, which were partly driven by increased royalty payments. The analyst action suggests confidence that profit momentum can overcome the operational challenges.
While the Hong Kong-listed entity dealt with lower output, its parent company, Zijin Mining Group, reported a nearly 98% year-over-year surge in net profit for the first quarter, benefiting from record gold prices and a significant expansion in its lithium business. The group's total gold production reached nearly 23.5 tonnes in the quarter.
The maintained rating signals Morgan Stanley's confidence in Zijin Gold's ability to capitalize on the high-price environment for the precious metal. Investors will be closely watching the company’s second-quarter results for signs of improved cost control and production stabilization.
This article is for informational purposes only and does not constitute investment advice.
