Valuation review: from the metal cycle to the growth of new energy. The excess return of stock price since listing is remarkable. Under the double resonance of resource cycle and new energy track growth, the valuation system is gradually transition from cycle to growth. At the beginning of listing in 2015-2016, the valuation system is relatively vague. The company won the favor of the secondary market by virtue of the forward-looking layout of copper and cobalt resources and precursors; from 2016 to mid-2019, the cobalt cycle dominated the company's stock price. Since the second half of 2019, the cobalt cycle has faded, and the firm layout of the company's new energy sector has gradually switched the valuation system to growth.

Multi-field professional integration layout and technology continuous research and development to build Huayou integration barriers. The nickel wet smelting process has higher capital and technical barriers, and there are few successful cases. The smooth production of 60,000 tons of wet nickel project in Huayue has proved the company's technological and technological advantages in this field. Huayue's successful experience is expected to be quickly replicated in subsequent nickel smelting projects in the future. Ternary precursors and positive electrodes have the dual attributes of technical iteration and low-cost scale manufacturing, and need to have the ability of continuous research and development and capacity expansion, and it is difficult for late entrants to catch up. The company's strategy to cut into the precursor business in 2013 has become a first-line supplier of precursors, with shipments entering the top three in the industry, while relying on the accumulated financial strength of copper and cobalt business to continue to expand precursors and positive production capacity to ensure low-cost leadership through resource self-supply.

In terms of resources and production capacity, the integrated layout of the company has entered the harvest period: on the resource side, it is expected to achieve full self-control of lithium, cobalt and nickel. Huayue wet process nickel was successfully put into production at the end of 21 years, fully reached production in March 22, 22 Huake fire nickel project is also expected to be put into production, Arcadia lithium mine at the end of 21 years is expected to enter the production cycle for 23 years, and the copper and cobalt resources laid out in Africa in the company's early years are now stable. At the precursor end, the production capacity of ternary / iron phosphate has reached 330000 tons / 100000 tons in 23 years. Through independent research and development and cooperation with LG and Posco, high nickel products continue to break through major customers; at the extreme, the production capacity of Bamo is expected to reach 150000 tons in 2023. The completion of Bamo acquisition is expected to accelerate the collaborative development of products with Huayou, and the integration is getting better and better.

The advantage of integration brings the resilience of the industrial chain and excess returns: the profit elasticity brought by the self-supply of nickel and cobalt core resources is calculated, and taking into account the continuous expansion of the company's precursor and positive production capacity, it is estimated that the net profit will be 5.8 billion yuan and 7.7 billion yuan in 2022 and 2023, corresponding to 21 and 16 times of PE.

Risk hints: 1) on the demand side, the sales volume of new energy vehicles has an important impact on the company's product sales, so risk hints are made on the possible sales volume of new energy vehicles that fall short of expectations; 2) on the cost side, raw materials account for a relatively high proportion of the company's product costs. Large fluctuations in raw material prices will cause large fluctuations in the company's product costs, so make a risk hint of possible sharp fluctuations in raw material prices. 3) on the company side, the project put into 3 degrees has a greater impact on the company's product output and profitability, so the possible capacity investment is not as expected to do risk tips.