Jinxun Shares Makes Another Attempt; Behind Accelerated Earnings Growth, Three Structural Risks Emerge

ZC Asia has learnt that Yunnan Jinshun Resources Co., Ltd. (hereinafter referred to as ‘Jinshun’) has recently submitted its second application for listing on the Main Board of the Hong Kong Stock Exchange. This comes merely six months after the company's initial filing.

According to the latest prospectus, Jinshun achieved operating revenue of RMB1.77 billion in 2024, representing a substantial year-on-year surge of 161.9%, with net profit reaching RMB202 million. This growth momentum continued in the first half of 2025, with revenue reaching RMB 964 million, a 61.7% year-on-year increase.

Ranked by Frost & Sullivan, Jinshun Co. stands as China's fifth-largest cathode copper producer based on 2024 output in the Democratic Republic of the Congo (DRC) and Zambia. It is also the sole Chinese company to feature in the top five producers in both nations.

The Growth Myth of African Gold Mining

The core of Jinsun's growth narrative lies in its strategic positioning within Africa's copper mining resources. The company specialises in the production and sale of cathode copper, with all its production facilities located in the African nations of the Democratic Republic of the Congo and Zambia.

The release of production capacity directly drove the surge in performance. In August 2023, its inaugural copper smelter in the DRC commenced operations, with substantial capacity expansion in 2024. This propelled the company's total cathode copper output from approximately 5,900 tonnes in 2022 to 20,900 tonnes in 2024. In 2024 alone, the DRC facility contributed around 16,000 tonnes – accounting for 76% of the company's total production.

This has resulted in a highly concentrated business structure. By the first half of 2025, cathode copper production accounted for a substantial 85.9% of revenue, establishing itself as the absolute pillar of performance. Leveraging the co-occurrence of copper and cobalt in its ore, the company has also commenced development of cobalt hydroxide products. However, this business segment contributed merely 1.2% of revenue in the first half of 2025, remaining in its nascent development phase.

To sustain growth, Jinsun plans substantial capacity expansion. Its Phase II project in the Democratic Republic of Congo, slated for commissioning in 2026, is projected to increase the company's total annual cathode copper capacity from the current 30,000 tonnes to nearly 61,200 tonnes.

High Growth Coexists with Weak Liquidity

Over the past three years, Jinshun's revenue surged from RMB 637 million in 2022 to RMB 1.77 billion in 2024, representing a compound annual growth rate (CAGR) of 66.6%. However, its profit performance has been volatile, with net profits fluctuating significantly at RMB 84 million, RMB 29 million, and RMB 202 million respectively during the same period.

Profitability metrics also exhibited pronounced fluctuations. The company's gross profit margin stood at 26.8%, 19.3%, and 20.8% between 2022 and 2024 respectively. Although the 2024 margin of 20.8% exceeded the company's stated average for domestic listed copper enterprises (7.6%), it still lagged behind the industry leaders' average gross profit margin of approximately 25%.

Of greater concern is its tightening liquidity. The company's debt-to-asset ratio has climbed from 24.6% in 2022 to 50.2% in 2024. For three consecutive years, its current assets have failed to cover current liabilities (with a current ratio persistently below 1), while its quick ratio has fallen from 0.9 in 2022 to 0.3 in 2024 – significantly below comparable industry peers.

As of the end of June 2025, the company held cash and cash equivalents of RMB127 million, while short-term bank borrowings reached RMB176 million during the same period – meaning cash reserves fell short of short-term debt. One intended use of the IPO proceeds is to repay approximately HK$142.4 million in principal from interest-bearing bank borrowings.

Growth Model Faces Triple Challenges

Behind the impressive performance, the prospectus and market analysis reveal three deep-seated structural risks embedded within its business model.

Firstly, there is a high degree of dependency. This manifests across three dimensions: customers, supply chain, and equity. From 2022 to 2024, sales to the top five customers consistently accounted for over 56.9% of total revenue. Concurrently, procurement from the top five suppliers as a proportion of cost of sales surged significantly from 25.1% to 62.1%.

Regarding equity, the company exhibits typical characteristics of family control. Prior to listing, the actual controller, Yuan Rong, held a combined stake of 99.02% through direct and indirect holdings. This absolute control, coupled with his concurrent roles as Chairman, CEO, and General Manager, and the appointment of his sister as Board Secretary, has raised market concerns regarding governance structure and the protection of minority shareholders' rights. The prospectus also disclosed historical instances where funds were utilised by parties related to the actual controller, though these have since been repaid. Nevertheless, these governance shortcomings have been formally recorded.

Secondly, the company faces the ‘African dilemma’ concerning geopolitics and operations. Its core assets and production capacity are entirely concentrated in the Democratic Republic of the Congo (DRC) and Zambia. While these regions are resource-rich, they also present risks including political instability, policy fluctuations, and inadequate infrastructure. For instance, in 2023, the DRC plant experienced production delays due to steel supply disruptions, while in 2024, the Zambian facility faced temporary shutdowns caused by localised conflicts.

Additionally, as a heavily polluting industry, environmental compliance poses significant challenges. During the reporting period, Jinshun's Zambian plant incurred fines for acid leakage and received an environmental remediation order. Under increasingly stringent environmental regulations, related costs and potential risks continue to rise.

Finally, there is the disadvantage of scale amid industry competition. Although ranking among the leading Chinese producers in Africa, Jinxun's global footprint remains diminutive. In 2024, its market share in the DRC's cathode copper sector stood at a mere 0.9%. Compared to industry giants with proprietary mines, Jinxun bears a higher proportion of raw material procurement costs, placing it at a disadvantage in cost control.

Jinxun Co. has nearly doubled its revenue scale within two years, painting a dynamic picture of expansion across Africa's resource-rich lands. Yet the sharply fluctuating profit curve in its charts, persistently sub-par liquidity ratios, and dense risk disclosures in its prospectus collectively reveal the flip side of this high-growth narrative.

The market ultimately assesses not merely the production capacity deep within the mines, but the company's overall resilience against cyclical fluctuations, geopolitical risks, and internal governance challenges. Whether this listing application marks a new beginning where its growth narrative gains capital recognition, or merely another tangible manifestation of its risk register, remains to be seen.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.