The company released its 2023 annual report and 2024 quarterly report, and achieved profit of 138 million yuan/31 million yuan in 2023/2024 Q1 respectively, a year-on-year change of -34.92%/+72.83%. The company's shipments of cobalt and copper products continue to grow, and it is expected to benefit from rising copper prices in the future and maintain an increase in holdings rating.

Key points to support ratings

The 2023 results decreased by 34.92% year on year: the company released its 2023 annual report and achieved profit of 138 million yuan for the year, a year-on-year decrease of 34.92%; deducted 192 million yuan for non-profit, a decrease of 14.40% year on year. According to the company's performance calculation, 2023Q4 achieved a profit of 7730 million yuan, turning a loss into a profit year on year, a decrease of 88.03% from the previous year; after deducting non-profit of 26.5886 million yuan, a year-on-year loss turned into a profit, a decrease of 63.14% over the previous year.

Results for the first quarter of 2024 increased 72.83% year on year: the company released its 2024 quarterly report, and achieved a profit of 306.634 million yuan in the first quarter, up 72.83% year on year, up 296.68% month on month; after deducting 61.5513 million yuan, up 70.24% year on year and 129.61% month on month.

Shipments continued to grow, and profits of cobalt products were under pressure: due to downward pressure on the global economy, supply and demand conditions, etc., metal prices fluctuated greatly. The company actively responded to changes in the industry, shipments increased steadily, and profits were under phased pressure. In 2023, the company achieved an output of 8301 tons, a year-on-year decrease of 18.20%, sales volume of 9046 tons, a year-on-year increase of 24.25%, achieved revenue of 1,795 billion yuan, a year-on-year decrease of 29.37%, gross profit margin of 5.04%, a year-on-year decrease of 10.18 percentage points; copper products achieved a year-on-year output of 49,866 tons, an increase of 10.18% over the previous year, and achieved revenue of 2,758 billion yuan, a year-on-year increase of 9.34%, gross profit margin of 24.10% year-on-year increase 4.10 percent.

Production capacity construction is progressing smoothly: the company's production capacity construction is progressing smoothly. Ganzhou Hanrui's “5,000 tons of electrocobalt project” was put into operation in July 2023, Ganzhou Hanrui's “annual production of 5,000 tons of electro nickel and 5,000 tons of electrocobalt project” started in November 2023; Ganzhou Hanrui's waste battery recycling project reached the scheduled state of use in December 2023; Hanrui Metals's 40000 ton electrodeposited copper production expansion project was put into operation in December 2023; Hanrui New Materials “produces 5000 tons per year” The “tonne lithium cobalate project” was put into operation in December 2023.

The future is expected to benefit from rising metal prices: Since 2024, due to the tight balance between supply and demand, global copper prices have continued to rise. London copper rose from about $8430 per ton at the beginning of the year to 9847 US dollars/ton on May 7, an increase of 16.8%. The company's performance is expected to benefit from rising product prices.

valuations

Under the current share capital, based on the company announcement and changes in cobalt copper commodity prices, we adjusted the company's 2024-2026 earnings forecast to 0.79/0.87/1.01 yuan (the original forecast diluted earnings per share was 1.07/1.12/-yuan), corresponding to a price-earnings ratio of 37.7/34.5/29.6 times; maintaining an increase in holdings rating.

The main risks faced by ratings

Demand for new energy vehicles fell short of expectations; global cobalt mining investment exceeded expectations; price competition exceeded expectations; technology iteration risks; overseas operations and exchange rate risks.