Event: on April 20, 2022, the company released its 2021 annual report. In 2021, the company achieved revenue of 4.16 billion yuan, an increase of 133% over the same period last year, and a net profit of 1.15 billion yuan, an increase of 124% over the same period last year, deducting 1.146 billion yuan of non-return net profit, an increase of 230% over the same period last year. In a single quarter, Q4 realized revenue of 1.239 billion yuan, an increase of 159.36 percent over the same period last year, an increase of 11.55 percent over the same period last year, and a net profit of 390 million yuan, an increase of 301.17 percent and 49.77 percent over the same period last year. The company intends to pay a cash dividend of 3.99 yuan per share (including tax).

The volume and price of cobalt and copper products increased in 2021, boosting performance growth. In 2021, revenue from cobalt products was 2.727 billion yuan, up 175 percent from the same period last year, while revenue from copper products was 1.267 billion yuan, up 70 percent from the same period last year. Revenue growth for cobalt and copper products comes from higher sales and higher average sales prices. (1) the sales volume of cobalt products was 8208.06 metal tons, an increase of 75.47% over the same period last year. In 2021, the annual production capacity of Congo Tengyuan cobalt intermediate products has reached 6000 metal tons, which makes the company's self-sufficiency of cobalt raw materials gradually improve. (2) the sales volume of copper products was 21584.87 tons, an increase of 18.98% over the same period last year. After adding 12000 tons of copper production capacity in 2021, the annual production capacity will reach 34000 tons, and the increase in production capacity will further ensure the supply of copper products. (3) Price: the average unit price of cobalt is 332300 yuan / ton, an increase of 51% over the same period last year. The average price of copper products was 587,000 yuan per ton, an increase of 43% over the same period last year.

On a month-on-month basis, the 2021H2 net interest rate increased by 0.1pct to 27.7%, and the expense rate increased by 3.9pct to 13.5% over the same period. Period fee: 2021H2 three fees totaled 88.35 million yuan, an increase of 53.4% month-on-month, R & D cost of 79.1 million yuan, an increase of 141.1%; period expense rate of 13.5%, month-on-month increase of 3.9pct. Net interest rate: although the expense rate increased month-on-month during the 2021H2, the company's comprehensive gross profit margin was 42.9%, which increased 2.9pct, so the company's net interest rate slightly increased to 27.7% month-on-month.

The core focus of the future: the fund-raising project is advancing steadily and the growth path of the company is clear. 1) the company listed on the gem in March 2022, raising 5.478 billion yuan for the construction of remote intelligent technological transformation and upgrading of a series of products with an annual output of 20,000 tons of cobalt and 10,000 tons of nickel metal and the matching production project of raw and auxiliary materials (Phase II). It is estimated that when the project reaches production in 2022, the company will form an annual production capacity of 20,000 metal tons of cobalt salt products. 2) the company's important construction projects also include the Democratic Republic of the Congo (DRC) plant and supporting projects. The third phase of the project is under construction, and after completion, the copper production capacity of Tengyuan in Congo will be expanded from 30,000 tons / year at the end of 2021 to 60,000 tons / year, and the company strives to achieve 40,000 tons / year of copper electrowinning capacity by the end of 2022. Cobalt intermediate products will also increase from 6000 tons / year at the end of 2021 to 10,000 tons / year in 2022.

Investment suggestion: the company's cobalt and copper production capacity will continue to grow in the future. Under the expectation of rising downstream demand, the growth path of the company is clear, and the performance is expected to maintain growth. We expect 2022Universe 2023 to achieve a home net profit of 21.13,383,547 million yuan respectively in 2024, an increase of 84.69%, 34.32%, 24.99%, and 28.16 yuan per share, respectively. Based on the closing price on April 22, 2022, the company has a "recommended" rating on its PE of 2022, 2023, and 2024, which is multiple of 10-7-6.

Risk hints: the project construction is not as expected; the risk of overseas operation; the risk of performance fluctuation caused by the fluctuation of cobalt and copper prices; the risk of changes in the company's product demand; the risk of the impact of COVID-19 's epidemic on the company's production and operation.