Initiation of Coverage Jiaxin International: Ramping into a tungsten deficit, initiate at Buy

Research evidence excerpt

Initiation of Coverage Jiaxin International: Ramping into a tungsten deficit, initiate at Buy

diluted) (HK$)

moly substitution in semiconductors, as it is confined to NAND word lines. Price From To % ch Cons.

outlook: We believe that the market may be underestimating demand resilience. Under 12/26E - 5.81 - 7.95

our 26E/27E China tungsten deficit of 1.1/2.3kt (~2% of total demand), we forecast 12/27E - 7.14 - 12.62

tungsten price at Rmb500k/550k/t in 2H26E/27E (+24%/36% vs spot). 12/28E - 7.53 - 15.33

Jiaxin to deliver 17% volume CAGR and 15% earnings CAGR over 2026-28E Sharon Ding

Analyst

Volume: We estimate Jiaxin's concentrate output of 8.6kt in 26E, ramping up to 11- sharon.ding@ubs.com

12kt in 27E/28E as Phase II production commences (+17% CAGR 26E-28E) and +852-2971 6284

eventually stabilize above 12ktpa. China Customs data implies that the ramp-up is on

Robin Chen

track: 1H26 implied sales of >4kt achieved 49% of UBSe 26E sales volume. Earnings:

Associate Analyst

As volume ramps up and based on our tungsten price estimate, we expect gross margin robin.chen@ubs.com

improved to 77% in 28E, delivering 15% earnings CAGR over 26E-28E, with potential +852-2971 8678

upsides from APT processing expansion and M&A.

Valuation: PE-based price target of HK$88.70, initiate at Buy

We initiate Jiaxin at Buy with HK$88.70 PT, adopting 12x target 27E P/E, derived from: 1)

Jiaxin's implied P/E of 10-16x when tungsten price was between Rmb400-600k/t; 2)10-

16x trading range from comparable tungsten/moly peers; 3) 11-17x trading range of

HK/China small metal miners. The stock currently trades at 6x 27E P/E, below our target.

We believe the current tungsten price ~Rmb400k/t is approaching the bottom of the

new cycle, with limited downside as supply-demand dynamics begin to rebalance.