CMOC Group Remains Undervalued Despite Record First Half

CMOC Group remains remarkably undervalued despite a historic first half that should have put the company firmly on every growth miner's radar. Revenue surged 42.8% to nearly $20 billion in the first six months of 2026, while net profit more than doubled. Copper output climbed nearly 10%, cobalt rose 7%, and operating cash flow reached $2.4 billion. Yet the stock trades at a discount to its own ten-year average. The market is still pricing this like a cyclical play on a commodities upswing rather than a company that is systematically growing its underlying asset base in the DRC while adding gold exposure in South America. Let me walk through why the numbers tell a different story.

Let me start with the cash flow. CMOC's H1 2026 results are not a commodity-price windfall riding thin volume growth. They reflect a company that is simultaneously raising prices and pushing more metal through the door. Revenue of $19.87 billion in the first half represents a 42.8% jump from the same period last year. Net profit attributable to shareholders came in at $2.37 billion, up over 85%. Operating cash flow reached $2.4 billion, a 36% increase. Return on equity climbed 6.6 percentage points to 18.3%. These are not the marks of a business merely benefiting from higher copper prices. They are the marks of a company whose production engine is accelerating.

What is driving that engine is a set of world-class assets in the Democratic Republic of Congo that are still ramping. CMOC holds an 80% stake in the Tenke Fungurume Mining (TFM) operation, which spans 1,600 square kilometers and operates five production lines with annual copper capacity exceeding 450,000 tonnes. The company also holds a 71.25% stake in Kamoto Copper Company (KFM), where a single production line already produces over 200,000 tonnes of copper annually. In the first half of 2026, CMOC produced 387,961 tonnes of copper, up 9.7% from a year earlier, and 65,305 tonnes of cobalt, up 6.9%. Full-year 2025 saw copper production reach 741,100 tonnes and cobalt hit 117,500 tonnes. The company is guided to produce between 760,000 and 820,000 tonnes of copper in 2026, implying double-digit growth over last year. And this is not the end of the expansion path.

KFM Phase II is advancing toward commissioning in 2027 and will add 100,000 tonnes of annual copper capacity. At TFM, preparations for Phase III are accelerating following confirmed resource potential at associated deposits. The company's longer-term target is 800,000 to 1 million tonnes of copper production by 2028. That is a step function in scale for a company that produced just 650,000 tonnes as recently as 2024. What this means for the reader is simple: even if copper prices stabilize at current levels, the volume growth alone is going to push earnings materially higher. The revenue and profit growth of 2026 is not a peak — it is a midpoint.

Cobalt is where the story gets even more structurally interesting. CMOC is one of the largest cobalt producers in the world, and cobalt prices have been surging. Cobalt hydroxide prices have climbed 345% since February 2025, while benchmark cobalt prices have more than doubled. The DRC, which supplies roughly three-quarters of global cobalt, introduced export quotas in late 2025, capping hydroxide exports at approximately 96,000 tonnes for 2026. That supply constraint is exactly the kind of structural tightness that benefits a low-cost, high-volume producer with existing quota allocations. CMOC is expected to export roughly 31,200 tonnes of cobalt in 2026 under the quota system. The cobalt business generated $1.8 billion in revenue in Q1 2026 alone, with a gross profit margin of 86.3%. That margin is extraordinary by any mining standard. Cobalt, produced as a byproduct of copper mining, is essentially high-margin cash flow with minimal incremental capex.

Now let's talk about the gold play, because this is the piece of the puzzle the market has not yet priced in. CMOC has been building a "copper plus gold" portfolio. The company acquired four gold mines in Brazil — Aurizona, RDM, and the Bahia complex — in January 2026. H1 2026 gold output reached 100,432 ounces. South American gold capacity is targeted to reach 20 tonnes by 2029, and a greenfield gold mine in Ecuador is scheduled to begin production the same year. Gold adds a commodity diversifier that doesn't track copper's cycle, which matters for cash-flow predictability. The gold segment already posted $1.2 billion in revenue in Q1 2026 with a 45.6% gross margin.

From a valuation perspective, this is where the disconnect is most apparent. The stock carries a P/E ratio of roughly 15.8, which sits 19% below its own ten-year median of roughly 19.6. For a company generating over 85% earnings growth in a single half-year, with production expanding double digits and a new gold portfolio in development, that discount is not a sign of market sophistication. It is a sign of inattention. The market is still treating CMOC as a Chinese cyclicals story rather than what it has become: a rapidly scaling copper producer with a cobalt cash machine and a growing gold business.

The balance sheet does not add additional concern. Total assets sit around CNY 201 billion, with total debt in the CNY 30 to 32 billion range — a manageable leverage posture for a company generating this much cash. The total liabilities-to-assets ratio dropped to 49.5% in 2024, a decrease of nearly nine percentage points from the prior year. In January 2026, the company issued $1.2 billion in zero-coupon convertible bonds due 2027, a financing move that improves liquidity while keeping costs low. None of this screams distress. It reads like a company funding expansion with manageable debt while generating enough operating cash to absorb the burden.

There are risks that deserve a direct look. The DRC remains a geopolitically fragile jurisdiction, and the company's copper-cobalt revenue concentration there is real. Export quotas, regulatory shifts, or political instability could disrupt operations or limit revenue recognition. Cobalt faces a secondary risk from accelerating adoption of low-cobalt battery chemistries, though demand from consumer electronics, defense superalloys, and residual EV applications has held firm. Copper, while benefiting from electrification-driven structural demand, is a global commodity and subject to cyclical swings. If Chinese economic growth slows materially or global construction demand weakens, prices could retreat.

While it's true that commodity exposure means CMOC is not immune to a macro downturn, I would argue that the volume growth trajectory and the diversification into gold provide a buffer that most pure-play copper miners do not have. Even if copper prices pull back from recent highs, the company is guided to grow copper output by double digits in 2026, and KFM Phase II will add another 100,000 tonnes starting in 2027. A price decline would be partially offset by volume gains. That is not an ironclad hedge, but it is better than most.

All things considered, the cash flow is accelerating, the production pipeline is expanding, the cobalt business is printing margins that border on extraordinary, and the gold portfolio is adding a non-correlated revenue stream. The valuation discount to the company's own history — let alone to the growth trajectory it is delivering — has not closed. The balance sheet is manageable, not stretched. KFM Phase II in 2027 is a concrete catalyst that will push the volume narrative further.

This does not mean CMOC is risk-free. It means the risk is priced into a valuation that has not moved in step with the underlying business. For a deep-value investor looking for cash flow growth with a margin of safety, CMOC remains one of the more compelling prospects in the metals space.

I reaffirm my Buy rating.