The company published its annual report for '23 and its quarterly report for '24. The company's revenue in 2023 was 66.30 billion yuan, up 5.2%; net profit to mother was 3.35 billion yuan, a decrease of 14.3%; the company distributed a cash dividend of 10 yuan (tax included) for every 10 shares to all shareholders.
Revenue for the first quarter of '24 was 14.96 billion yuan, down 21.7%; net profit to mother was 52.0 million yuan, down 49.0% from the same period, with a year-on-year increase of 54.4%. The same decrease in the company's net profit in the first quarter was mainly affected by falling metal prices and increased financing costs.
Indonesia's nickel-cobalt project progressed smoothly, building the company's core competitiveness. Since 2018, the company has begun the development layout of nickel and cobalt resources in Indonesia. Currently, it has built Huayue's 60,000 tons of nickel metallurgical wet processing project, Huake's high-nickel metallurgy project with an annual output of 45,000 tons, and Huafei's wet smelting project with an annual output of 120,000 tons of nickel metal, with 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 process project with Vale and Ford; cooperated with Vale Indonesia to promote the development of resources at the Sorowako mine; and reached strategic cooperation intentions with Volkswagen (China) and Qingshan Holding Group to plan the construction of the Indonesian hydrometallurgy project. By the end of the first quarter of '24, the company's Huafei project had basically reached production, the Huayue project was steadily overproduction, and the preliminary work of the Pomalaa hydrometallurgy project was being carried out in an orderly manner. We believe that the stable and overproduction operation of the company's nickel smelting project shows that the company has mastered the high-pressure wet process, which will build the company's core competitiveness in lithium battery cathode cost competition.
Taking a stake in four Indonesian nickel mines, the nickel-cobalt resource layout is slowly unfolding. The company lays out mining resources through shareholding and long-term supply agreements, and has participated in Indonesia's Vida Bay nickel industry and SCM mines through indirect shareholding.
In March '24, the company successfully completed minority shareholding transactions in two Indonesian mines, AJB and WKM, further consolidating the company's nickel ore resource guarantee. We believe that nickel ore resources are very important to the company's long-term development. As Indonesia's overall nickel smelting capacity increases, the low-cost and stable supply of nickel ore will become a moat for the company's nickel industry competition.
The Arcadia lithium mine was completed and put into operation to complete the distribution of energy metals resources. The company's Arcadia lithium project in Zimbabwe was completed and put into operation, and the lithium carbonate production line of the Guangxi battery-grade lithium salt project with an annual output of 50,000 tons reached production standards in the first quarter of 2024. We believe that the completion and commissioning of the company's Arcadia project complements the company's upstream resource layout for lithium battery cathode materials. As project output increases, we believe there is room for the company's lithium salt production costs to decrease.
Profit forecasting and ratings. Huayou Cobalt is a leading integrated lithium battery cathode material enterprise. It has a presence in upstream resources, midstream manufacturing, and downstream recycling. We expect the company's 2024-2026 EPS to be 2.01, 2.65, and 3.83 yuan/share. Referring to comparable company valuations, we will give the company 20-22 times PE in 2023, corresponding to a reasonable value range of 40.20-44.22 yuan/share, giving it a “superior to the market” rating.
Risk warning. The construction progress of the company's nickel-cobalt project in Indonesia was lower than expected, and the cost reduction of the company's lithium project was lower than expected.