Xiamen Tungsten (600549.SH) Initiating Coverage: Mid-Bubble-Squeeze in the Tungsten Price Supercycle; Normalized Valuation Cannot Support the Current Price

Rating: Cautious Bearish｜Target Price Range: RMB 28-34｜Current Price: RMB 50.00 (close as of 2026-09-02)｜Time Horizon: 6-12 months

• Total market cap: RMB 79.379 billion (total shares 1.5876 billion × RMB 50.00)
• Margin of safety (caliber: baseline fair-value floor vs. current price): approximately -44% (no margin of safety; current price significantly above baseline fair value)
• Probability-weighted fair value across three scenarios: approximately RMB 36.15, -27.7% vs. current price
• Overview: the stock has retraced about 47% from its June 2026 high of RMB 94.50, but under a cycle-normalization framework the current price still implies bull-market pricing of a tungsten concentrate midpoint of RMB 600k-900k per metric ton; the key observation windows are the Q3 2026 earnings report in late October and the second batch of mining quotas between September and November.

I. Executive Summary of Core Conclusions

The company is the most fully integrated midstream leader in China's tungsten industry chain (first-tier globally in APT and tungsten powder capacity, world's largest in fine tungsten wire, No. 2 nationally in cemented carbide). In H1 2026, net profit attributable to parent was RMB 2.201 billion, up 127% YoY, and the company has secured effective control of the world-class Dahutang tungsten deposit (retaining approximately 1.383 million tonnes of WO3) — quality and asset base are both above the industry median. However, price and quality must be assessed separately: wolframite concentrate prices have squeezed down from the March 2026 peak of RMB 1.05 million per metric ton to about RMB 415,000 by August (-60%, though still at a historically elevated plateau). The consensus for 2026 (attributable net profit of RMB 4.89-5.05 billion) implies H2 profit of RMB 2.69-2.85 billion, higher than the RMB 2.201 billion already realized in H1 — contradicting the reality of tungsten prices nearly halving, the Luoyang Yulu zeroing out on shutdown, and continued inventory impairment. We estimate 2026 attributable net profit at RMB 3.6-4.0 billion; using a baseline of "tungsten price midpoint of RMB 300k-350k per metric ton + normalized attributable profit of about RMB 2.8 billion + mid-cycle 15-18x PE," fair value is RMB 28-34, or about RMB 32-40 after partially discounting resource and spin-off options — the current price of RMB 50 remains 25%-56% above this. We maintain a cautious bearish stance: wait for the earnings downgrades at the Q3 report and two-way confirmation from quota/long-term contract pricing; if tungsten concentrate holds firmly above RMB 450,000 per metric ton, this judgment faces revision.

II. Investment Opportunity Assessment

• Opportunity in one sentence: the halving of the share price has digested part of the bubble, but at the current price a "bull scenario" must still materialize with roughly 30% probability — earnings downgrades and impairment risk on RMB 23.2 billion of unhedged inventory have yet to be fully cleared; this is not yet an investable opportunity. First watch the October Q3 report and quota rollout.
• Evidence grade B: the core fact chain (H1 attributable profit of RMB 2.201 billion, impairments of RMB 1.278 billion, inventory of RMB 23.223 billion, Yulu shutdown, terms of the Jiangxi Jutong acquisition) has been verified item by item against original announcements; however, the normalized tungsten price midpoint and profit elasticity coefficients are our own estimates on a caliber not disclosed by the company.
• Market regime fit: mid-stage bubble squeeze at a cyclical high + institutionalization of strategic metal controls — two-way forces coexist, and the price path is the only first-order variable.
• Primary share price driver: the tungsten concentrate price midpoint (elasticity estimate: every ±RMB 10k per metric ton in the midpoint ≈ ±RMB 43 million in attributable profit); secondary drivers: the pace of sell-side consensus downgrades, the pace of inventory impairments, and supply policy (second quota batch).
• Demonstrable expectation gap: sell-side consensus 2026E attributable profit of RMB 4.891 billion (10 analysts) implies H2 of RMB 2.69 billion > the H1 actual of RMB 2.201 billion; this report estimates RMB 3.6-4.0 billion, a divergence of roughly 18%-26%. Verification point: the Q3 report in late October 2026.
• Validation and falsification: validation — QoQ decline in Q3 attributable profit, Q3 inventory write-down provision amount, and total volume of the second quota batch in September-November; falsification — long-term contract quotes recovering above RMB 450,000 per metric ton for 2-3 consecutive periods, inventory declining QoQ for two consecutive quarters, and operating cash flow turning positive.

III. Investment Thesis

C1 — The current price of RMB 50 implies a tungsten price midpoint of RMB 600k-900k per metric ton or full realization of the 2026 consensus; cycle-normalized fair value is RMB 28-34, with the current price about 47%-79% above it (confidence 0.55)

• Reverse valuation (our estimate; methodology in E6): current market cap of RMB 79.379 billion ÷ mid-cycle reasonable multiple of 20-15x = implied sustainable attributable profit of RMB 3.97-5.29 billion. Back-solving via a two-point elasticity model — "2025 average price of RMB 219k → attributable profit of RMB 2.309 billion; 2026H1 average price of about RMB 650k-750k → half-year profit of RMB 2.201 billion" — is equivalent to a tungsten concentrate midpoint of about RMB 600k-900k per metric ton sustained long term — 1.5-2.2x the current spot price (RMB 410k-420k, weakening in early September).
• THS F10 (snapshot as of 2026-09-02): 2026E consensus EPS of RMB 3.0805 (10 analysts) implies H2 attributable profit of RMB 2.69-2.85 billion > H1's RMB 2.201 billion; all 21 ratings are Buy/Overweight, median target price RMB 72.6, and the 90-day expectation revision is still positive (+1.3%) — the upgrades occurred near the March tungsten price pulse top.
• Multiples and percentiles (actual calculation at the 2026-09-02 close): PB 4.25x, at the 85th percentile of the past 5/10 years; PE(TTM) 22.4x (TTM attributable profit of RMB 3.54 billion) — TTM includes pulse-period inventory gains and already bears the H1 impairments; the percentile is for reference only.

The bear case argues: the SW Tungsten sector median PE is about 28x; 28x × normalized profit of RMB 2.8 billion ≈ RMB 78.4 billion, making the current price "close to reasonable" on normalized earnings; moreover, under export controls, the roughly 4x gap between overseas APT at about USD 340/kg WO3 and domestic at about USD 85/kg should converge in favor of the export chain rather than compress the price midpoint. We acknowledge this path — it is precisely the core of this report's bull scenario (probability 0.30); but using the sector's pulse-period trading multiple as the valuation anchor is circular "arguing the price from the price," whereas a mid-cycle anchor should be independent of the current market price: the company's 3-year median PE is 18.6x and 10-year median PB is 2.96x (midpoint ROE of about 14% implies a reasonable PB of 2.4-2.7x, i.e., RMB 28-32). The choice of PE anchor and the tungsten price midpoint are the twin decisive variables of this judgment, with sensitivities explicitly laid out in the scenario table.

C2 — 2026 attributable net profit of RMB 3.6-4.0 billion, about 18%-26% below sell-side consensus (confidence 0.65)

• 2026 Semi-Annual Report Summary (2026-08-21): H1 attributable profit of RMB 2.201 billion (+127.04%), recurring profit of RMB 2.055 billion (+122.81%), revenue of RMB 35.014 billion (+81.70%); the positive earnings pre-announcement (2026-07-15) attributed the increase to "rises in tungsten, cobalt, lithium carbonate, and praseodymium-neodymium oxide prices + price-linked selling prices + volume growth" — the earnings engine was a product of the high-price environment in H1.
• Tungsten price trajectory (Securities Times 2026-07-08; CTIA 2026-09-01): wolframite concentrate fell from the March peak of RMB 1.05 million per metric ton to RMB 455,000 in early July and stabilized at RMB 410k-420k in August — the H2 average price midpoint is nearly half the H1 level (about RMB 650k-750k); under the price-linkage mechanism, revenue and price-spread profit in the tungsten & molybdenum segment will shrink significantly.
• Luoyang Yulu shutdown announcement (Lin-2026-083, 2026-07-02): CMOC suspended the supply of molybdenum tailings for processing; this subsidiary earned about RMB 336 million net in H1, contributing RMB 168 million attributable (7.6% of total), which goes essentially to zero from July, with no restart timetable.
• Impairment caveat: the RMB 1.121 billion inventory write-down provisioned in H1 stemmed from "sharp price volatility" (the collapse from RMB 1.05 million to RMB 410k, per the original text of Lin-2026-106); the provision is tied to the rate of price change rather than the price level. If tungsten prices stabilize at RMB 410k-450k in H2, the Q3 provision should be significantly smaller than H1's; but if prices break below RMB 400k, a single-quarter provision could reach the RMB 500 million scale — on a stabilization-but-weak path we estimate H2 attributable profit of RMB 1.4-1.8 billion and full-year RMB 3.6-4.0 billion.

C3 — RMB 23.2 billion of unhedged inventory + RMB 17.4 billion of interest-bearing debt + negative operating cash flow: under a continued tungsten price decline, a "write-down + working capital" double hit (confidence 0.65)

• 2026 Semi-Annual Report: period-end inventory carrying value of RMB 23.223 billion (+59% from the start of the year, 50.32% of current assets, mostly tungsten-related but including battery materials and work in process); H1 net operating cash flow of -RMB 2.463 billion (+RMB 824 million in the prior-year period); debt-to-asset ratio of 59.17% (52.41% at the start of the year); quick ratio of 0.62.
• Short-term interest-bearing debt of about RMB 13.3 billion (short-term borrowings RMB 12.440 billion + current portion RMB 891 million) vs. cash + wealth-management products of about RMB 7.325 billion (estimated caliber, coverage of about 0.55); the 2025 annual report explicitly states "derivatives investment for hedging purposes: not applicable" — no commodity hedging whatsoever.
• Trough-scenario stress test (tungsten price reverting to RMB 150k-250k per metric ton): recurring attributable profit of about RMB 1.8-2.2 billion (about RMB 2.26 billion at a RMB 200k midpoint per elasticity, net of the Yulu gap); adding one-off inventory write-downs (cumulative RMB 1.0-2.5 billion over H2 2026-2027), reported attributable profit for a single year could fall as low as RMB 1.2-1.6 billion; at trough EBITDA of about RMB 5.5-8.0 billion, net debt/EBITDA would be about 1.3-1.8x; with Fujian SOE control and zero share pledges, debt service is manageable — but only on the precondition of proactive destocking and restraint on related-party acquisition spending.

C4 — Dahutang control + Kinglong Rare Earth IPO + XTC New Energy stake: three options worth roughly RMB 11.0-17.5 billion at current-caliber prices (RMB 7-11 per share) — a basis for long-term re-rating, but realization is gated (confidence 0.60)

• Jiangxi Jutong acquisition announcement (Lin-2026-100/101, 2026-08-21): RMB 593 million for a 30.1683% stake (plus 1.3483% previously transferred for RMB 27 million, total consideration about RMB 620 million) + a concert-party agreement with the controlling shareholder Rare Earth Group → Jiangxi Jutong consolidated; secures the Dahutang South and North mining rights with retained WO3 of about 1.383 million tonnes and molybdenum of about 33,000 tonnes — the company's attributable tungsten resources jump from about 400,000 tonnes to about 1.61 million tonnes.
• Acquisition pricing anchor (original announcement text): the mining-rights valuation used the 2022-Oct 2025 average price of RMB 136,800 per metric ton (only 21% of the Jan-Jul 2026 average of RMB 646,500), filed with the Fujian SASAC — the SOE injected assets at conservative price parameters, implying significant resource re-rating headroom at the current price.
• Option inventory (our estimate): XTC New Energy (688778, 50.28% held) stake worth about RMB 11.2 billion (hard floor); Dahutang mining rights valued at RMB 2.178 billion, re-marked at RMB 400k/646,500 per ton prices and discounted at 31.52% attributable interest and a 3-5 year construction period, worth about RMB 2.0-3.2 billion; Kinglong Rare Earth (65.2% held) at about 60% of the Feb 2026 private-placement valuation of about RMB 3.7 billion, i.e., about RMB 2.2 billion (premium if the IPO clears review) — total about RMB 11.0-17.5 billion.
• Gates and discounts (original announcement text): both Dahutang mines have been shut down since December 2015/December 2020 respectively, have "not yet begun construction," mining quotas "need to be resolved through later reallocation," the Xiushui Jutong litigation has not yet come to trial, and there is no earnings compensation; Kinglong Rare Earth's BSE filing has gone unaccepted for over a month; the Laos Mengkang rare earth project was suspended as of 2026-08-08. Option realization is a 3-5 year affair; the base scenario only partially discounts them.

C5 — Governance watch points: rising density of related-party transactions and capital tied up in real estate (direction is "conservative injection" rather than value extraction; confidence 0.55)

• Announcement Lin-2026-100 (original text): "In the past 12 months, the aggregate value of various related-party transactions between the company and the Provincial Industrial Holding Group and its directly and indirectly controlled companies has reached or exceeded 5% of the company's most recent audited net assets" — Jiangxi Jutong (RMB 620 million), 69% of Jiujiang Dadi (RMB 295 million), XTC Motor capital increase (RMB 251 million), etc., all landing in quick succession.
• The Jiangxi Jutong target is insolvent (net assets of -RMB 178 million at end-April 2026); the 888.74% appraisal appreciation rate is an artifact of a negative base, and "this transaction includes no earnings compensation arrangement" — the pricing anchor is the SOE-filed appraisal value, so the direction does not constitute value transfer to the detriment of the listed company, but the review and inquiry risks to minority shareholders from related-party acquisitions objectively exist.
• Real estate overhang: Tengwang Pavilion Real Estate has net assets of -RMB 731 million and a 2025 total profit of -RMB 148 million; intercompany balances at the parent level are about RMB 2.26 billion (eliminated on consolidation, not third-party credit risk); the listed floor price for the remaining units of the Straits International Community is only RMB 192 million, with slow exit progress — "unwaveringly exiting real estate" (investor Q&A, 2026-07-03) remains a work in progress.

IV. Core Financial Data

Note: FY2023/FY2024 are on the restated caliber from the FY2025 annual report. FY2024 recurring profit = 21.90 ÷ 1.4416 back-calculated, for reference only.

Drivers of metric changes (company-explained caliber attached for all YoY changes ≥ ±20%):

• 2026H1 revenue +81.7% and total profit +139.3%: the company attributes this to "rises in tungsten, cobalt, lithium carbonate, and praseodymium-neodymium oxide prices + price-linked selling price increases + steady volume growth in key products" (earnings pre-announcement).
• Inventory rose from RMB 8.45 billion at end-2023 to RMB 23.223 billion at end-2026H1: the company attributes this to "expanded operating scale and rising prices of key raw materials"; the single-quarter jump of RMB 4.09 billion in 2026Q1 reflects proactive stockpiling during the tungsten price upswing.
• 2026H1 operating cash flow turned negative (-RMB 2.463 billion): the company attributes this to "sharply rising tungsten raw material prices combined with expanded operating scale, substantially increasing capital tied up in inventory."
• H1 asset impairments of RMB 1.278 billion (inventory write-downs of RMB 1.121 billion + receivables bad debt of RMB 151 million): the company attributes this to "sharp volatility in tungsten segment raw material prices, causing write-down losses on inventory held in normal operations."
• FY2025 inventory +72.7%, receivables +44.6%, taxes and surcharges +68.45% (including RMB 63 million of resource-tax back payments by Luoyang Yulu): per the balance sheet analysis in the 2025 annual report.
• Minority interests reached RMB 975 million in 2026H1, 30.7% of consolidated net profit: driven by surging profits at non-wholly-owned subsidiaries such as XTC New Energy (50.28% held), Kinglong Rare Earth (65.2%), and Jinlu; the company did not disclose a separate breakdown.

Quick Take on the Latest Results (2026H1)

H1 attributable profit of RMB 2.201 billion delivered on the pre-announcement (RMB 2.216 billion guided, -0.7% deviation), but recurring profit of RMB 2.055 billion came in about RMB 120 million (-5.5%) below the guided RMB 2.176 billion, a gap consistent with the timing of concentrated mid-year impairment top-ups — a profit-quality blemish worth noting. By quarter, Q1 attributable profit was RMB 1.107 billion (+189%) and Q2 RMB 1.094 billion (-1.2% QoQ), so sequential momentum already stalled in Q2. By segment, the tungsten & molybdenum business posted revenue of RMB 16.151 billion (+83.8%) and total profit of RMB 3.296 billion (+161%), the absolute profit engine; battery materials (XTC New Energy) revenue was RMB 14.488 billion (+91.1%) with attributable profit of RMB 491 million (+46.6%); rare earths revenue was RMB 4.355 billion (+51.5%) with total profit of RMB 145 million (+101%). The quality of H1 profit deserves a discount: operating cash flow of -RMB 2.463 billion diverged from attributable profit of RMB 2.201 billion by nearly RMB 4.7 billion, mainly from stockpiling at high prices — a meaningful portion of book profit is a mirror image of inventory gains, which will unwind in reverse as tungsten prices fall (RMB 1.121 billion already written down in H1). Against sell-side consensus: the anchor for judging "whether the market has priced this in" is the 2026E consensus of RMB 4.891 billion, implying H2 of RMB 2.69 billion, +22% QoQ vs. H1 — in the H2 reality of halved tungsten prices and Yulu at zero, we judge consensus will enter a downgrade channel after the Q3 report; this report estimates RMB 3.6-4.0 billion for the full year (H2 RMB 1.4-1.8 billion).

V. Business Model and Earnings Quality

Business model in brief: Fully integrated tungsten industry chain (own mines → APT smelting → tungsten powder/cemented carbide powder → cemented carbide/cutting tools/fine tungsten wire) + lithium battery cathode materials (consolidated Xiamen Tungsten New Energy) + rare earth deep processing (Golden Dragon Rare Earth) + phased exit from legacy real estate. Order-based product sales, no subscription/recurring revenue; predominantly asset-heavy smelting and deep processing, with mine self-sufficiency below 20% (confirmed by the company on its July e-interaction platform)—essentially a midstream leader with "no resource advantage but strengths in manufacturing and materials." Pricing power is at its historical peak: quota + export controls have linked prices across the chain; cemented carbide sales volume grew +12.51% in 2025 while gross margin rose +1.87pp to 28.38%; lithium cobalt oxide holds roughly 54% global market share and fine tungsten wire leads globally.

Cash content of earnings (core warning): OCF/net profit attributable to parent for 2023–2026H1 was 2.68 → 1.79 → 1.29 → -1.12, deteriorating continuously and turning negative in 2026H1; FCF/net profit for 2023–2025 was 1.36 → 0.54 → 0.43, falling below the 0.5 warning threshold in 2025. During the price-rally cycle, the cash conversion of book profits has collapsed—essentially "profit = inventory appreciation + receivables expansion": behind the RMB 2.2 billion H1 attributable profit lies an RMB 8.6 billion inventory build-up in half a year. Gap between recurring earnings and attributable profit: of the RMB 2.201 billion attributable profit in 2026H1, RMB 2.055 billion was non-GAAP (recurring), with non-recurring items of about RMB 146 million; but the more critical recurring issue is the blurred "one-off/recurring" boundary of the RMB 1.121 billion inventory write-down—if tungsten prices grind lower, such charges will recur.

Return on capital: ROIC FY2025 approximately 8.8% (NOPAT RMB 3.351 billion ÷ invested capital RMB 38.083 billion, our own estimate), FY2024 approximately 7.2%—above the 8% warning line but below the 15% excellence line; through-cycle ROE approximately 12.7%–15.3% (2022–2025), i.e., "above average, not top-tier" capital efficiency, consistent with the business model of midstream manufacturing + low self-sufficiency.

Maintenance CapEx: 2025 purchases of fixed assets RMB 1.989 billion ÷ depreciation & amortization RMB 1.414 billion ≈ 1.41—in the neutral 1–1.5 range, not yet a "capital black hole," but the restart of Dahutang construction (3–5 years, substantial scale) will push CapEx/depreciation back up.

Moat and red flags: The moat is real—over sixty years of tungsten metallurgy and powder technology accumulation, full-chain integration, and certification barriers from global No.1 positions in fine tungsten wire/lithium cobalt oxide. Red flags are equally concrete: ① minority shareholders siphon off 31% (Xiamen Tungsten New Energy is only 50.28%-owned); ② no commodity hedging + RMB 23.2 billion inventory exposure; ③ core scheelite feedstock source Luoyang Yulu was cut off by the JV partner (its H1 attributable contribution of RMB 168 million went to zero), exposing single-source dependency; ④ OCF has declined for three consecutive years.

VI. Management Assessment

Consistency of words and deeds: pragmatic and largely delivers. Two examples of commitment vs. delivery: ① The 2024 annual report set a 2025 revenue plan of RMB 40.078 billion with a target of growing total profit → actual RMB 46.265 billion (15.4% above plan), total profit +27.8%; ② The 2025 annual report committed to "taking revenue and total profit to a new level" in 2026, plus a rare operations update announcement on 2026-07-21 to stabilize expectations → H1 total profit +139%, in progress. Management's operating plan figures carry high credibility, and proactively disclosing operations during the sharp share price decline is a positive.

Shareholder friendliness: neutral-to-friendly, but with a dilution record. Payout ratio for FY2023–2025: 35.41% → 38.59% → 40.15% (three-year plan committed to no less than 30%), plus an interim 2026 dividend of RMB 667 million (RMB 4.2 per 10 shares, 30.3% of H1 attributable profit)—the rising dividend is real; however, in December 2024 a private placement of 169.6 million shares (@ RMB 20.80) raised net proceeds of RMB 3.516 billion, diluting ~12%, and there has not been a single market buyback even as tungsten prices rose. Overall judgment: returns primarily via dividends, expansion funded by equity financing—"neutral-to-friendly."

Risk signals: ① Rising related-party transaction density (over 5% of audited net assets in the past 12 months, see C5); ② April 2026 chairman transition (Huang Changgeng → Zhong Kexiang), plus multiple director changes in June/August; ③ Investor-platform responses to share price declines were mostly boilerplate (July 2026 e-interaction records); ④ The Jiangxi Jutong acquisition had no performance compensation clause. None fatal individually, but together they heighten the need for governance monitoring.

VII. Segment Breakdown

The profit engine is the tungsten-molybdenum segment, not battery materials, which ties for the top revenue spot: tungsten-molybdenum, with 43.9% of revenue, contributed roughly 84% of segment operating profit (3.205/3.861 billion); battery materials has similar revenue scale but only a 9.78% gross margin, and only half is consolidated at the attributable level—judging Xiamen Tungsten's cyclical position is, in essence, judging tungsten prices.

Why an 18.6pp gross margin gap (28.38% vs 9.78%): the tungsten-molybdenum segment embeds own-mine profits (mine-side 2025: Xingluokeng subsidiary net profit RMB 410mn, +92%; Duchang Jinding RMB 362mn, +63%) plus control-driven linked price increases; battery materials is a "metal price + processing fee" tolling model where most of the cobalt/lithium price gains must be passed through to downstream battery makers, leaving the company only processing fees and inventory management gains—two different businesses, two different bargaining powers, and they should not be valued on the same multiple.

2026H1 structural shifts: tungsten-molybdenum revenue RMB 16.151 billion (+83.8%), total profit RMB 3.296 billion (+161%)—profit concentration into tungsten-molybdenum intensified during the price rally; rare earth total profit RMB 145 million, battery materials RMB 572 million, with far less elasticity than tungsten.

VIII. Accounting Techniques and Cross-Period Consistency Checks

Accounting red flags:

1. Sudden jump in inventory write-downs (medium-high): annual provisions long ran at RMB 310–370 million; 2026H1 spiked to RMB 1.278 billion (inventory write-downs RMB 1.121 billion); after inventory swelled from RMB 8.45 billion to 23.2 billion over three years, impairments landed in a lump—stockpiling during rallies, provisioning during declines, amplifying cross-period earnings volatility (Announcement 2026-106, Note 2).
2. Gap between earnings preannouncement and periodic report (medium): non-GAAP preannounced RMB 2.176 billion vs actual RMB 2.055 billion, a gap of RMB 120 million (-5.5%), consistent with the timing of concentrated impairment top-ups.
3. Related-party acquisition with high appraisal premium and no performance compensation (medium): Jiangxi Jutong net assets of -RMB 249 million → appraised value RMB 1.967 billion, an appreciation rate of 888.74% (distorted by the negative base), no performance compensation (Announcement 2026-100).
4. Funds parked in a loss-making subsidiary at long tenors (medium): Tengwangge Real Estate has net assets of -RMB 731 million; parent-level intercompany balances of RMB 2.257 billion, of which RMB 1.477 billion over 3 years (2025 annual report notes; eliminated on consolidation—in substance, funds trapped by the slow real estate exit).
5. Positive confirmation: R&D capitalization ratio is 0 (2025 annual report)—no room for capitalization-based earnings management; conservative accounting policy.

Cross-period consistency:

• OCF/attributable net profit 2.68→1.79→1.29→-1.12: consistent with the company's explanation (inventory build-up); directional disclosure is honest.
• Inventory balance RMB 8.45→14.6→23.2 billion vs the pace of write-downs: the company has not specifically explained the risk exposure composition of high-price stockpiling, attributing it only to "expanding operating scale"—insufficient disclosure granularity.
• Luoyang Yulu net profit 195→123 (incl. RMB 63mn back taxes)→H1 RMB 336 million, then abrupt halt: the company has not explained the long-term arrangement of its cooperation with CMOC—the biggest operating-disclosure blind spot today.
• Top five customers' share of receivables at 44.53% (vs 41.66% prior year): rising concentration, a slow-burn red flag.

IX. Resource Stock Deep-Dive: Reserves, Costs, Hedging, and NAV

Reserves and production table (tungsten, WO3 basis):

Resource reserve replacement: after the Dahutang injection, group attributable resources rose from ~400k tonnes to ~1.61mn tonnes WO3—a one-off sharp swing to positive replacement; but no new exploration disclosures for operating mines (Xingluokeng deep exploration expected to complete by end-2026).

Unit economics: 2025 domestic wolframite concentrate (65% WO3) average price RMB 217.4k/tonne (+59.3%, Antaike), APT average price RMB 318.9k/tonne (+57.9%); Jan–Jul 2026 concentrate average RMB 646.5k → August RMB 410–420k. The company's tungsten feedstock self-sufficiency is below 20% (cost basis: own mines 18.49% of ore raw materials in 2025 vs 28.44% in 2024—self-sufficiency declining); the smelting stage primarily secures feedstock for deep processing (APT sales 3,314 tonnes, -36.87%), with profits coming mainly from "a small amount of own ore + inventory linkage + deep-processing spreads." The company does not disclose AISC or full cost per tonne—a disclosure gap.

Hedging and price sensitivity: No commodity hedging whatsoever (2025 annual report: "not applicable"). Two elasticity estimates in this report: every ±RMB 10k/standard tonne in tungsten price midpoint ≈ ±RMB 43mn attributable net profit; H1 empirical: a price decline of roughly 60% from peak corresponded to RMB 1.121 billion of inventory write-downs (32.2% of H1 total profit). ±10% price move (base RMB 415k) ≈ ±RMB 180 million attributable—but this linear elasticity excludes the non-linear impact of inventory write-downs; in a sharp-decline scenario, actual elasticity would be substantially larger.

Geopolitics and mining rights: Domestic quotas are rigid (first 2026 tranche 60k tonnes, +3.45% YoY; second tranche landing window Sep–Nov); under export controls, APT exports fell to near zero at end-2025, and the company's 2025 export value -27.51%; the Laos rare earth project suspended due to local policy; Myanmar imported ore (national imports 17.7k tonnes Jan–Nov 2025) subject to local turmoil. Mining license tenors are in the table; deep-mining transition at Xingluokeng must be completed before its 2034 expiry.

NAV perspective: Asset layer = attributable net assets RMB 18.7 billion + resource revaluation (Dahutang at 31.52% of the filed appraised value of RMB 1.967 billion, plus uplift to the new price midpoint) of ~RMB 1.5–2.5 billion ≈ RMB 20.0–21.2 billion, i.e., ~RMB 12.6–13.4/share. Reference anchors: Jiangxi Jutong's state-filed basis of ~RMB 1,794/tonne for industrial ore WO3 (2022–Oct 2025 average price parameters), the most recent domestic transacted benchmark; Almonty at ~USD 36k of market value per tonne of resource (including operating + greenfield portfolio and Western premium—noisy, directional reference only). The current price stands at ~4x the asset layer—the premium is mainly pricing of earnings and options, not asset replacement value.

X. Valuation and Odds

Current market data (2026-09-02 close, frozen anchor for this run): Share price RMB 50.00, market cap RMB 79.379 billion; PE(TTM) 22.4x (58th percentile over the past 5 years / 30th percentile over 10 years; TTM includes pulse-driven inventory appreciation and bears H1 impairments—percentiles are reference only); PB 4.25x (85th percentile over 5/10 years, one of the primary anchors for cyclical stocks); PS(TTM) 1.28x. Liquidity normal (average daily turnover ~RMB 1.5-1.9 billion, 2%+ of market cap, no liquidity risk disclosure obligation).

Peer comparison table (actual figures around 2026-09-02):

Sector multiples overall at high levels of the pulse period (Shenwan tungsten median PE ~28x)—hence "cheap" on a relative basis is not absolute cheapness.

Market-implied expectations: Current price RMB 79.379 billion ÷ mid-cycle fair multiple of 20-15x = implied sustainable net profit of RMB 3.97-5.29 billion; solving back from the two-point elasticity model (FY2025 RMB 2.309 billion @ RMB 217.9k; H1 annualized RMB 4.402 billion @ ~RMB 700k), this equates to a long-term tungsten concentrate mid-price of RMB 600k-900k per metric ton—whereas reality is September spot at RMB 410k-420k and weakening, Luoyang Yulu at zero, and Datangtang contributing nothing for 3-5 years. A concise juxtaposition: the current price requires the company to sustain "tungsten prices at 1.5-2.2x spot" long term, or exact delivery of 2026 consensus (RMB 4.89-5.05 billion); while the H2 reality path points to RMB 1.4-1.8 billion.

Three-layer value (EPV): Asset value ~RMB 13.0/share (NAV layer, see "Resource Stock Special Topics" chapter); EPV with zero growth ~RMB 18.56/share (normalized net profit RMB 2.8 billion ÷ 1.5876 billion shares = EPS RMB 1.76 ÷ WACC 9.5%, net debt conservatively set at 0); growth option = 50 − 18.56 ≈ RMB 31.4/share, ~63% of the current price (this report's actual calculation). Of the 63% growth premium, identified options (XTC New Energy stake of RMB 11.2 billion + Datangtang revaluation of RMB 2.0-3.2 billion + Jinlong Rare Earth of RMB 2.2 billion, totaling RMB 11.0-17.5 billion = RMB 7-11/share) can explain about 1/3; the remaining ~RMB 20/share must be supported by "a tungsten mid-price sustained at ≥RMB 450k long term." Normalization base note: RMB 2.8 billion is run-rate earnings under "current asset structure + mid-price of RMB 300k-350k" (two-point elasticity method RMB 2.66-2.88 billion, excluding the Yulu gap, adding back real-estate drag convergence); XTC New Energy growth and Datangtang ramp are unrealized increments, placed per discipline into scenarios and options, not stuffed into the zero-growth base.

Three scenarios and odds:

Probability-weighted fair value ~RMB 36.15, -27.7% vs current. The current price sits within the lower portion of the bull-case range—i.e., the market is essentially pricing "the bull scenario materializing with high probability," with odds clearly skewed to the downside (downside exceeds upside).

Bear-case anchoring note: The most pessimistic published sell-side forecast is a lower-bound 2026E EPS of ~RMB 2.04 (net profit ~RMB 3.24 billion, 10jqka F10 snapshot 2026-09-02; all 21 houses positive, no target prices below the current price, and no short-selling mechanism in A-shares—the extreme positive skew of sell-side distribution is a structural phenomenon). This report's bear case of RMB 18-22 covers the valuation implication that "this forecast is unsustainable under a RMB 200k-250k tungsten scenario, with net profit cut to RMB 2.0-2.4 billion"; taken directly, RMB 3.24 billion × 12-14x = RMB 24.5-28.6, above this bear range—the difference stems from that sell-side lower bound still embedding an H2 tungsten price rebound, a price path the bear case does not accept. The bull anchor (Sinolink 2026-07-28 target price RMB 75.2, 2026-2028 net profit of 4.98/6.39/7.97 billion) exceeds this bull-case ceiling of RMB 66—because this report assigns 12-14x (not 24x) to cycle-peak earnings; the base case implies 2026E net profit of RMB 3.6-4.0 billion, between the market's most pessimistic (RMB 3.24 billion) and most optimistic (RMB 4.98 billion) views, without overstepping.

In-house earnings forecasts (reconciliation anchor):

Conclusion: Overvalued. Target price range RMB 28-34 (= base-case fair value); the current price is ~61% above the base-case fair midpoint and 25%-56% above the "base + partial option discount" support range (RMB 32-40); quality (full-chain leader + world-class resources + through-cycle ROE 12.7-15.3%) is no reason to chase. Safety margin is negative (base-case fair floor of RMB 28 is -44% vs current price).

⚠ Chart "65% Wolframite Concentrate Price Trajectory (RMB 10k/mt, Key Points)" failed to render; omitted

XI. Industry Landscape and Competitive Positioning

Industry size: Tungsten is a typical minor metal combining China-dominated supply with strategic controls. Resources: 2025 global tungsten mine output ~85,000 tonnes (W metal content, USGS basis), of which China 67,000 tonnes, ~79% (79-83% in 2024); global reserves ~4.6-4.7 million tonnes, China ~2.4 million tonnes, 52%, followed by Australia ~12%, Russia ~9%, Vietnam ~3%. At August 2026 domestic 65% wolframite of ~RMB 415k/mt, annual global tungsten concentrate output value is ~RMB 68.4 billion (165k mt × RMB 415k, this report's estimate). Manufacturing: 2024 global cemented carbide output 138,900 tonnes, China 43.2%; China's cemented carbide output ~61,000-62,000 tonnes in 2025, 2016-2025 CAGR ~9.23%. Volume grows at low-to-mid single digits over the next 3-5 years; price is the protagonist of this cycle—under supply rigidity (quotas + export controls), institutions broadly expect a systemic upward shift in the mid-price. Sources: USGS, Ministry of Natural Resources, China Nonferrous Metals News, public China cemented carbide industry data.

Demand structure and structural-increment stress test: China tungsten consumption structure (2024, Antaike basis): cemented carbide 58.5%, tungsten products 22.6%, specialty steel 15.1%, chemicals 3.8%. Three potential "demand inflection points" examined one by one: ① PV tungsten wire—diamond wire cores migrating from steel (40μm+) to tungsten (30-32μm), penetration ~10-20% in 2022 → ~50% in 2024 → ~60-80% in 2026, with Huatai Securities projecting 98% by 2028; at full penetration annual tungsten demand is in the thousands of tonnes, ~3-5% of global demand—real but past its steepest slope, in mid-to-late penetration; the absolute volume is insufficient to re-rate the whole tungsten industry as growth; duopoly suppliers (Xiamen Tungsten Honglu + China Tungsten & Hightech), with Honglu the world's largest fine tungsten wire producer (~16 billion meters sold in 2024); future growth rests on fine-wire premiums rather than penetration. ② Defense—global military tungsten consumption ~3,000 tonnes in 2025 (+36%, institutional estimate unverified), driven by armor-piercing penetrators and defense stockpile rebuilding; share trending up from 12% toward 15%—a trend, not a single-point inflection. ③ Humanoid robots—thousand-tonne scale only after 2030; currently narrative. Conclusion: no structural demand inflection of the "step-change in unit consumption" kind; tungsten's pricing logic remains "supply rigidity + strategic controls within a cycle," with valuation treated under a cyclical normalization framework (see "Valuation and Odds" chapter); PV tungsten wire features as Xiamen Tungsten's structural advantage at the segment level.

Value chain and value distribution: Tungsten concentrate (quota holders strong) → APT smelting (China holds the vast majority of global capacity, homogeneous processing-fee model, spreads squeezed in the 2025-26 cost-chasing phase, transmitted monthly via biweekly long-term quotations) → tungsten powder/tungsten carbide powder (Xiamen Tungsten in the global first tier) → cemented carbide/CNC inserts (tied to manufacturing and AI/semiconductor equipment machining; under "tungsten up, tools dearer," toolmakers' cost pass-through lags, industry margins pressured in 2026) + tungsten wire (PV diamond wire, EDM) + specialty steel/chemicals. This cycle's value distribution clearly tilts toward upstream concentrate: post export controls, resource holders are strong and midstream smelters passively chase prices; Xiamen Tungsten spans the full chain but self-sufficiency is below 20%, with profit elasticity significantly lower than resource-heavy peers (H1 net profit +127% vs Zhangyuan +497%, Xianglu +2522%); in exchange it gains multi-segment buffers in price downturns and a more stable earnings band—"strong mines, weak smelting" is this cycle's distribution signature, and the Datangtang injection is precisely the capital response to it.

Supply structure and response pace: China's quota system is the supply master valve—total extraction control indicator 114,000 tonnes in 2024 → first batch 58,000 tonnes in 2025 (-6.45% YoY) → first batch 60,000 tonnes in 2026 (+3.45% YoY, second batch landing Sep-Nov, market expects a cut); domestic output 67,000 tonnes in 2025 (-9%). Import supplement: concentrate imports 12,400 tonnes in 2024 (+113.6%), 17,700 tonnes in Jan-Nov 2025, mainly from Myanmar/North Korea/Russia—the Myanmar situation is the biggest source of disruption (Russian capital approved in June 2026 to mine tungsten in Myanmar's Shan State). Overseas rebuilding has begun but is slow: Almonty's Sangdong mine in Korea achieved commercial production on July 1, 2026 (the first major new Western mine in years, ~2.3 kt concentrate in 2026, expanding to ~4.6 kt in 2027), Kazakhstan's Aksholak plans first output in 2028, Portugal's Panasqueira expanding—ex-China output was only ~14,000 tonnes in 2024, and 2026-2028 overseas new mines coincide with flat Chinese quotas; China's global share drifts lower slowly, but filling the gap still takes time. Domestic Chinese increments are quota-constrained, focused on "consolidation + restart" (Datangtang being such a case).

Supply-demand balance and current cycle position: Global tight balance trending to shortage—BMO notes global inventories extremely low and expects continued shortage in 2026; but domestic prices experienced a full pulse: RMB 143k at the start of 2025 → RMB 459k at end-2025 (full-year average RMB 217.9k, +59%) → broke RMB 500k in January 2026 → speculative peak of RMB 1.05 million in March (hoarding + default-driven trust crisis) → bubble squeeze in Q2-Q3 → RMB 415k-420k in August (-60% from peak, still the 100th percentile of the decade, ~2.7x the normal high of RMB 156k). Overseas is an entirely different picture: export controls pushed China's APT exports to near zero at end-2025; European APT rose from ~USD 83/kg WO3 in January 2026 to USD 340/kg in July (RMB 1.73-1.96 million/tonne), a ~3x gap with domestic (~RMB 610k/tonne)—a bifurcated regime of "extreme overseas shortage, domestic high-level rebalancing." Judgment: we are in the late stage of a high-level bubble squeeze, not the start of a downcycle—overseas spreads, low global inventories, and quota rigidity provide a floor, but speculative inventory destocking and demand destruction (high prices spurring ceramic tools/tungsten-free alloy substitution and recycled tungsten) have not yet run their course. Leading indicators: Xiamen Tungsten/Zhangyuan/Xianglu biweekly long-term quotations (first half of August +RMB 1,000 MoM, stabilizing), APT-concentrate spread, toolmaker utilization, export license issuance pace, social inventories.

Regulation: ① Extraction quotas (direction: tightening); ② Export controls (MOFCOM/GACC Announcement No. 10 of February 2025 controlling tungsten items; 2026-08-27 US BIS reciprocal ban on unlicensed exports of tungsten scrap and waste—escalation of the control contest); ③ Strengthened strategic-metal status (US lists tungsten as a critical mineral; Kazakh mining rights awarded to a US-led consortium); ④ State stockpiling: no public operations observed in 2025-26 (historically occurred), market rumors exist (unverified). Regulation cuts both ways for Xiamen Tungsten: a higher price midpoint directly amplifies tungsten-molybdenum segment profits (H1 total profit +161%), but suppresses export volumes (Xiamen Tungsten is the No.1 tungsten exporter, 2026H1 overseas revenue RMB 6.222 billion, 2025 APT sales volume -36.87%).

Company industry positioning: The leader with the most complete coverage of China's tungsten value chain and the strongest midstream position—first-tier global capacity in APT and tungsten/tungsten carbide powder, the world's largest tungsten wire/molybdenum wire capacity, No.2 national cemented carbide output (behind China Tungsten & Hightech), duopoly leader in PV fine tungsten wire, and the No.1 exporter among tungsten firms. Share trends: midstream manufacturing share stable to rising; resource share on the eve of an inflection (~1.61 million tonnes WO3 attributable resources post-Datangtang consolidation, mid-term self-sufficiency set to rise sharply, but construction takes 3-5 years). Moat sources: full-chain integration + metallurgical powder technology accumulation + high-end material certification barriers + Fujian rare earth platform synergies—not resource monopoly. Versus resource-heavy peers: Xiamen Tungsten is a "low-elasticity, high-stability" integrated play; versus China Tungsten & Hightech: Xiamen Tungsten is stronger in fine tungsten wire, cutting-edge materials, and export channels, with lower resource self-sufficiency (China Tungsten's resources overtook it after the Shizhuyuan injection).

⚠ Chart "Peer Comparison: PB vs 2026H1 Net Profit Growth" failed to render; omitted

XII. Overall Conclusion and Monitoring

Overall verdict: Cautiously bearish, confidence 0.55, time horizon 6-12 months. Xiamen Tungsten's quality is beyond doubt—full-chain integrated leader, management with a strong record of delivering on operating plans, payout ratio rising for three consecutive years, and RMB 620 million already committed to locking in world-class tungsten resources; the problem is entirely price and expectations: the tungsten mid-price assumption implied by the current price (RMB 600k-900k/mt) versus H2 reality (RMB 400k-450k, Yulu at zero, impairments not yet cleared) entails an inevitable downward revision, and RMB 23.2 billion of un-hedged inventory puts a built-in amplifier on that revision. The stock's 47% drawdown from RMB 94.5 has completed most of the bubble deflation, but the second phase of "earnings cuts + valuation reversion" most likely is not over—probability-weighted fair value RMB 36.15 (-27.7%). Strategically, do not catch the falling knife on the left side; wait for one of two signals: ① Q3 report confirms the H2 RMB 1.4-1.8 billion path + consensus downgrades exhausted (if the price then approaches the upper edge of base-case fair value, risk/reward resets); ② long-term quotations recover to RMB 450k+ for 2-3 consecutive rounds and the second-batch quota is sharply cut (in which case the bear/base probabilities of this view need re-estimation).

Risk disclosures: Upside risks (adverse to this view)—tungsten price rebounds beyond expectations on stockpiling/tighter controls/overseas restocking, Datangtang construction exceeding expectations post-closing, Jinlong Rare Earth application quickly accepted; downside risks (favorable to this view)—tungsten price falling below RMB 300k/mt, Q3 impairments above RMB 500 million, prolonged Luoyang Yulu shutdown, Tengwang Pavilion disposal losses.

Monitoring calendar:

This report is based on the 2026-09-02 close (RMB 50.00, frozen anchor for this run) and public information as of 2026-09-03. Primary source materials: Xiamen Tungsten 2023-2025 annual reports, 2026 semi-annual report and summary, 2026 Q1 report, earnings pre-announcement (2026-07-15), asset impairment provision announcement (Provisional-2026-106), Jiangxi JV equity acquisition announcements (Provisional-2026-100/101), Luoyang Yulu suspension announcement (Provisional-2026-083), Laos Mengkang rare earth project suspension announcement, 2025 annual report investor Q&A records; industry data from USGS, Ministry of Natural Resources, Antaike, S&P Global, BMO, and public reports from Securities Times/Cailian Press, among others.