Integrating leading assets in various fields of core materials for new energy vehicles, the advantages of resources, technology and customers are remarkable, and growth is outstanding. The company has developed rapidly since its establishment in 2007 and was successfully listed in 2014. Its main business focuses on the field of architectural ceramics. In the four years since 2016, the company has rapidly and accurately integrated the core material assets of new energy vehicles, forming a trend where the main business conditions of ceramics are stable, and the cobalt (raw material - cobalt salt - precursor), carbon nanotube conductive agent, and lithium business is developing collaboratively. The first is the raw material side. The company's announcement shows that in 2019, Congo Gold has an annual production capacity of 2,000 tons of crude cobalt and 60 million tons of cathode copper, and plans to build a new project with an annual output of 5,000 tons of cobalt intermediate (metal weight) and 10,000 tons of cathode copper; the second is the cobalt end. The company currently has an annual production capacity of 10,000 tons of cobalt salt, which is second only to Huayou Cobalt in the next three years; the fourth is the current 10,000 tons of conductive agents, which are 10,000 tons of new conductive agents. The annual production capacity of electrical agents is only slightly lower than that of Tenney in China Technology (688116.SH), ranked second, is expanding production by 10,000 tons. Domestic new conductive agents, especially carbon nanoconductive agents, have ushered in a period of opportunity. First, the new conductive agent has excellent performance, still low permeability, and is entering a period of rapid development. According to GBII data, the penetration rate of carbon nanotube conductive paste in domestic power lithium batteries in 2018 was only 31.8%, and the penetration rate of 3C lithium batteries was only 18%. The novel conductive agent can significantly improve the cycle life and ratio performance of lithium-ion batteries, and there is plenty of room for replacement. Second, the prospects for silicon-carbon anodes are good, giving carbon nanoconductive agents broad demand space. Currently, carbon nanoconductive agents are mainly used in cathode materials, and most of the anodes are graphite. However, the theoretical energy density of silicon-carbon anodes is ten times that of graphite anodes, and carbon nanotube conductive agents will inevitably be used. The subsequent industrial application of silicon-carbon anodes is expected to bring broad demand space for carbon nanoconductive agents. Third, relying on the scale of demand and industrial support advantages, the NEV industry chain has accelerated domestic replacement. China has the largest NEV market and the most complete industrial support system, and leading overseas car companies, represented by Tesla, are speeding up the construction of domestic supply systems. GBII data shows that the domestic conductive agent localization rate in 2018 was only 31.2%, and there is plenty of room for domestic replacement, so it is imperative. Qingdao Haoxin, a wholly-owned subsidiary, is a leading enterprise in the new conductive agent industry, and continued increase in production capacity is expected to drive high performance growth. Qingdao Haoxin, a wholly-owned subsidiary, mainly produces graphene conductive agents and carbon nanotube conductive agents. It has a technical research and development team with Dong Angang, an expert from the CPC Organization Department's Youth Thousand Talents Program as the chief scientist, has perfect preparation processes and equipment, and has established long-term stable supporting supply relationships with large domestic battery manufacturers such as BYD. The company currently has an annual production capacity of 10,000 tons of conductive agents and is expanding production by 10,000 tons. Benefiting from the growth of the industry and the expansion of its own production capacity, the net profit of 2019H1 Qingdao Haoxin was 35.126 million yuan, +45% over the same period last year, and the net interest rate was as high as 21%. The high-quality production capacity of the ternary material precursor business has entered a period of rapid expansion. The company's tertiary precursor business belongs to Jana Energy, a wholly-owned subsidiary. The first is customer quality. It has leading domestic customers such as Zhenhua New Materials, Xiamen Tungsten Industry, and Hunan Yacheng; second, it is leading technology. The company has the ability to develop high-end precursors on its own. In the first half of 2019, it has successfully completed the industrial development of several varieties of 6 series and 8 series three precursors, and has passed tonnage product verification for downstream customers; the third is rapid expansion. An annual production capacity of 22,000 tons has been formed in the first half of 2019. The “20,000 tons/year power battery ternary material industrialization project” in Jiana, Hunan is under construction. In June '19, part of the capital raised was changed to build 10,000 tons of ternary precursors. We expect precursor production capacity of 3.2, 50, and 80,000 tons from 2020 to 2022, respectively. According to the announcement, the long-term plan is 100,000 tons. Cobalt prices have bottomed out and cobalt salt production has expanded. Performance has broken out of the haze and continues to rise. The company's 2019Q2 performance turned a month-on-month loss into a profit. In 2019Q3, it achieved a net profit of 51.48 million yuan, +151% month-on-month. The single-quarter results have completely broken out of the haze of losses. First, benefiting from the discontinuation of production of the large-scale cobalt mine Mutanda and the gradual improvement in demand for 3C and new energy vehicles, a marginal improvement in supply and demand in the cobalt industry, there is a high probability that the price center will rise in 2020. Second, in response to the sharp drop in cobalt prices in the previous period, the company has already calculated an inventory price drop loss of 175 million yuan in 2019Q1, and the performance burden is light. Third, there is still potential for expansion in production capacity. In June '19, part of the capital raised was changed to “build a new project with an annual output of 5,000 tons of cobalt intermediates (metal content) and 10,000 tons of cathode copper”. Furthermore, the company currently has a production capacity of 11,000 tons of cobalt salt, and the company announced that it will achieve a cobalt salt production capacity of 20,000 metal tons in the next three years. Investment advice: Optimistic about the revaluation of the company's core materials for new energy vehicles, maintain a “buy-A” rating, and give a target price of 18 yuan for 6 months. The company has strong industrial integration and incubation capabilities for the NEV core materials industry. Businesses such as carbon nanotube conductive agents and cobalt (raw material - cobalt salt - precursor) are well-deserved leading suppliers in the industry. The industry has a high position and outstanding growth. Since October 2019, the NEV industry chain boom is expected to continue to rise. Coupled with a bottoming recovery in cobalt prices, the company's performance has rebounded for two consecutive quarters. In view of the recovery in the industry and the active expansion of production by leading companies, the company's performance is expected to improve significantly, and the valuation is in a low position compared to comparable companies, and has strong potential for revaluation. We expect net profit from 2019 to 2021 to be 40 million yuan, 270 million yuan, and 390 million yuan respectively, giving a “buy-A” rating. The target price for 6 months is 18 yuan, which is equivalent to a dynamic price-earnings ratio of 30x in 2020. Risk warning: 1) Production and sales of conductive agents fell short of expectations; 2) the progress of precursor production capacity release fell short of expectations; 3) NEV production and sales fell short of expectations; 4) Low cobalt prices exceeded expectations.