Key points of investment
The company released the 2023 annual report and the 2024 quarterly report. The full year of 2023 achieved revenue of 66.304 billion yuan, +5.19% year over year; realized net profit of 3.351 billion yuan, -14.25% year over year; net profit after deducting non-return to mother was 3,093 billion yuan, -22.25% year over year. In 2023, the company plans to distribute a cash dividend of 10 yuan (tax included) to all shareholders for every 10 shares.
In the first quarter of 2024, the company achieved revenue of 14.963 billion yuan, -21.7% year-on-year; realized net profit of 522 million yuan, or -48.99% year-on-year. Non-net profit deducted from mother was 568 million yuan, or -42.97% YoY.
The Huafei project basically achieved production at the end of the first quarter. In 2024, it is expected to contribute to a solid increase in performance. The Huafei 120,000-ton nickel metal hydrometallurgy project in Indonesia began some production lines in June 2023 and basically reached production at the end of the first quarter of 2024. As the world's largest laterite nickel ore wet smelting project, it has had an epoch-making impact on the global nickel industry pattern. Another Indonesian project, Huayue's 60,000-ton nickel-metal-weight hydrometallurgical smelting project has been steadily overproduced, and the entire SCM slurry pipeline has been completed; Huake's 45,000-ton high-nickel metallicity ice nickel project has reached production, and the company has a total production capacity of 225,000 tons (metal-weight) of nickel intermediates. In addition, the company is jointly planning the construction of the Pomalaa high-pressure acid immersion method project with Vale and Ford; it is cooperating with Vale Indonesia to promote the development of resources at the Sorowako mine. The company shipped about 126,000 tons of nickel products in 2023, an increase of 88%. Nickel shipments are expected to continue to grow in 2024.
The company's precursor shipments bucked the trend and increased its market share
In 2023, the company sold 129,000 tons of tertiary precursors, +30.6% year-on-year. The company stepped up overseas market development efforts, deepened the Korean market, and signed long-term supply agreements with Pohang Chemical and Puhua. It quickly entered the Japanese market, entered the supply chain of Japanese car companies through various channels, achieved in-depth industrial chain cooperation and development of various new precursor products; actively laid out the European and American markets, and deepened global cooperation with local cathode-battery-automobile chains in Europe and the US such as Ford Motor Company, VW, Ford, and BASF.
The company's cathode materials increased slightly, and the proportion of high nickel increased
Shipments of cathode materials were about 95,000 tons, an increase of about 5% over the previous year. Shipments of high-nickel ternary cathode materials of 8 series and 9 series and above exceeded 67,000 tons, accounting for about 83% of total shipments of ternary materials. The company's ternary cathode materials have been supplied in large quantities to leading global power battery customers such as Ningde Era and LGES, forming a rich industrial ecological chain and widely used in well-known domestic and foreign brands of electric vehicles.
The company's many projects are progressing steadily
In the lithium sector, the Arcadia lithium mine project in Zimbabwe in Africa was completed and put into operation in 2023. The lithium carbonate production line for the battery-grade lithium salt project with an annual output of 50,000 tons in Guangxi reached production standards in the first quarter of 2024. Some electric nickel projects in Quzhou and Guangxi have been completed and put into production. Preliminary work on the European region of the Bamo ternary cathode material project in Hungary is progressing in an orderly manner. In March 2024, it successfully completed the minority shareholding transaction for two Indonesian mines, AJB and WKM, further consolidating the company's nickel ore resource guarantee. The steady recommendation of multiple projects has further consolidated the company's integrated mining and metallurgy business model, and the integrated layout of the new energy lithium battery industry continues to deepen.
Profit forecasting
Due to large price fluctuations of metals such as lithium, cobalt and nickel, we lowered the company's profit forecast. We expect the company's net profit to reach 32.2/36.4/5.14 billion yuan in 2024-2026, respectively, -3.9%/+13.0%/+41.4% year-on-year, maintaining the company's “buy” rating.
Risk warning
1) If the future sales volume of new energy vehicles falls short of expectations, it will affect the company's sales of third-generation drives and regular-priced materials, and the company's profitability will decline. 2) The company has many overseas projects, and there are certain operating risks. 3) The risk of large fluctuations in the prices of metals such as copper, cobalt, nickel, etc.