China's leading cobalt salt production enterprises. Tengyuan Cobalt New Materials Co., Ltd. is a rare cobalt salt manufacturer in China, which can independently plan, design and manufacture copper and cobalt wet smelting production line. The company was founded in 2004, the core products are cobalt salts and copper electrowinning. The company's main production base is located in Congo (DRC) and Ganzhou, China. The Congolese wholly-owned subsidiary is responsible for the procurement of raw materials and rough processing of intermediate products, and the domestic factory is responsible for the deep processing of cobalt salts and other metal products. The company has excellent comparative advantages and strong growth attributes in the industry, and the company's growth and development is highly matched with the continuous expansion of the new energy cycle.

The company has entered a period of structural expansion, profitability and market share may continue to improve. The scale of the new energy market continues to expand, and the company's growth resonates with the expansion of the industry. As the best growing listed company in China's cobalt industry, the company's revenue grew at an average annual compound rate of 46.2% from 2016 to 2021. In view of the fact that cobalt and copper products account for more than 90% of the company's total revenue, the effective increase in cobalt and copper production capacity may boost the company's business scale to 10 billion by 2024 (compared with 21,117% and 20,400%). In addition, considering the scale effect brought by the release of the company's production expansion project, and combined with the characteristics of continuous optimization of the company's historical gross profit margin in cobalt and copper business, we expect the company's gross profit margin to increase to 43.56% by 2024. The company's market share of cobalt products is also expected to increase from 5.7% to more than 15%.

Multi-dimensional construction of industry leadership, strong growth attributes to resist the risk of cyclical fluctuations. The company has technical and technological advantages (independent design and manufacture of smelting equipment and production lines), cost advantages (the average cost per unit of cobalt manufacturing in the past four years is 62% of companies in the same industry), resource stability advantages (strong supply network and mining rights expansion), business model advantages (flexible production and direct marketing), team stability advantages (more than 10 years of team cooperation experience and clear management system), Customer advantage (well-known customer base is stable and extensive Market share has expansion basis), growth advantage (cobalt salt and copper production capacity + 208% and 200% respectively). The diversification advantage and structured growth attribute of the company can resist the periodic fluctuation risk to a certain extent.

The company has a strong comparative advantage in the industry, and the gross profit level is highly related to the price of the main products. Industry comparable analysis shows that the company's growth, profitability and operating ability are relatively better. The risk analysis of output and price fluctuation of main products shows that the company's comprehensive gross profit margin is more sensitive to price changes. If the annual average price of cobalt and copper decreases by 10%, 20%, 30%, the company's comprehensive gross profit margin may be reduced to 35.2%, 27.3%, 17.4%.

Company profit forecast and rating suggestion: considering the good outlook of battery demand and the expansionary demand brought about by new energy infrastructure, the tight balance between supply and demand in the cobalt and copper industry may boost prices. Combined with the company's comparative advantages in the industry and future production capacity expansion advantages, we expect the company to achieve operating income of 70.69%, 89.39%, 11.101 billion yuan in 2022-2024, an increase of 69.9%, 26.5%, 24.2%, and a net profit of 19.22%, 25.33%, 3.307 billion yuan, an increase of 67.1%, 31.7%, 30.7%, and 11.4%, 8.66.6, respectively. Cover for the first time and give a "recommended" rating. Wind risk tip: metal price retracement risk, capacity release less than expected risk, market growth slowdown or demand decline risk, overseas operating risk, accounts receivable and inventory impairment risk.