According to Citigroup in "The Big Banks," investors are overly concerned about Zijin's three-year production guidance, raising the target price to 51.8 yuan

Citi's research report pointed out that it has recently received multiple inquiries regarding Zijin Mining (02899.HK) latest three-year production guidance, board independence, shareholder returns, and the role of the former chairman. Citi explained the above concerns and updated its model for Zijin, raising the target price for Zijin's H shares from HKD 39 to HKD 51.8 based on a DCF valuation model, and increasing the target price for Zijin's A shares (601899.SH) from RMB 35.5 to RMB 46.6, with both H shares and A shares rated as "Buy"; maintaining its position as the industry preferred stock.

The bank stated that concerns from investors regarding the increased risk of local state-owned assets supervision committee's control over the group after the departure of former chairman Chen Jinghe are unfounded, as the group is different from other provincial or central enterprises (whose key management appointments are led by the state-owned assets supervision committee). The local state-owned assets supervision committee has historically adopted a passive investment strategy, appointing only one non-executive member to Zijin's board and allowing the capable management team to continue running the company, a practice expected to remain unchanged.

Citi also believes that the investors' concerns about the three-year production plan failing to achieve the 2030 target are excessive, given that the new board's term will end in 2028. The bank is confident that the company is inclined to provide clearer performance guidance, as a three-year plan is more effective than a five-year plan. It expects the company to provide a rolling three-year plan and does not anticipate significant restructuring of the board in 2028. Additionally, it is not particularly concerned about the potential shift in mergers and acquisitions towards WanGuo Gold (03939.HK) after Chen Jinghe's appointment, as Zijin's scale is much larger than WanGuo Gold, and the acquisition targets for both parties should differ.

The bank predicts that Zijin will gradually increase its dividend payout ratio, incorporating the company's latest guidance and adjusted metal price forecasts. Based on higher gold and lithium price forecasts and increased gold sales forecasts, it has raised the group's profit forecasts for 2025 to 2027 by 1%, 29%, and 12% to RMB 51.6 billion, RMB 81.7 billion, and RMB 76.6 billion, respectively