3Q26 earnings missed; expect slightly better 4Q26

CMOC's net profit dropped 6% QoQ to RMB7.87bn in 3Q26, 21% below our forecast. The miss mainly came from the higher-than-expected unit cost of copper and cobalt and lower-than-expected trading profit. We now expect the company's earnings to grow 2% QoQ in 4Q26 mainly on higher contribution from copper, cobalt and gold operations. We trim our 2026-28 earnings forecasts by 2-4% and lower our target price to HK$19.97. Despite all these, we still maintain our BUY call. In 3Q26, the company's unit cost of copper and cobalt surprisingly surged 31% QoQ and 33% QoQ, probably owing to the rise in cost of raw materials, including sulphur. The unit cost of molybdenum also increased 28% QoQ. The sales volume of cobalt and tungsten only reached 54% and 59% of our forecasts. Its trading profit also only reached 52% of our forecast on lower than expected margin. The company only sold 12.7k tonnes of cobalt in 9M26 but it has secured quota of 31.2k tonnes for the year, and we believe it will try to us