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According to Caixin, August 19th - Affected by the sharp decline in nickel and lithium prices, Huayou Cobalt's (603799.SH) performance continued to be under pressure in the first half of this year. However, company revenue and net profit both stopped falling in the second quarter.

Huayou Cobalt released its 2024 interim report tonight, with revenues of 30.05 billion yuan in the first half of the year, a year-on-year decrease of 9.88%; net income attributable to the parent company was 1.671 billion yuan, a year-on-year decrease of 19.87%; the net cash flow generated from the company's operating activities was about 2.764 billion yuan, a year-on-year increase of 54%. According to financial data, Huayou Cobalt's Q1 revenue and net profit were 14.963 billion yuan and 0.522 billion yuan respectively, a year-on-year decrease of 21.7% and 48.99%. Calculated from this, the company achieved revenue of 15.09 billion yuan in Q2, an increase of 5.99% year-on-year; net profit was 1.148 billion yuan, an increase of 8.23% year-on-year, and an increase of approximately 119.81% compared to Q1 net profit. Huayou Cobalt said that the second quarter of 2024 saw a significant increase in performance compared to the first quarter, mainly due to the gradual production and standards reached of upstream nickel resource development projects, and the effectiveness of the company's integrated business strategy is gradually apparent.

Based on this calculation, the company achieved revenue of 15.09 billion yuan in Q2, a year-on-year increase of 5.99%; and achieved a net profit of 1.148 billion yuan, a year-on-year increase of 8.23%. The Q2 net profit growth rate was approximately 119.81% higher than the Q1 growth rate. Huayou Cobalt said that the second quarter of 2024 saw a significant increase in performance compared with the first quarter, mainly due to the gradual production and standards reached of upstream nickel resource development projects. The effectiveness of the company's integrated business strategy is gradually apparent.

Huayou Cobalt is mainly engaged in the research and development and manufacturing of new energy lithium-electric materials and cobalt and nickel new materials products. In its view, the company's main product shipments steadily increased in the first half of the year, and business performance stabilized and rebounded, further highlighting the advantages of industrial integration. Specifically, in the first half of this year, the company's lithium-ion cathode precursor shipments (including ternary precursors and tricobalt tetroxide, including internal self-supply) increased by approximately 11% year-on-year. Sodium-ion precursor shipments achieved a hundred-ton breakthrough. The cathode material shipments were approximately 0.053 million tons (including internal self-supply and equity of joint-stock companies), a slight decrease from the previous year, but with a Q2 growth rate of over 20% compared to the previous quarter. Cobalt product shipments were approximately 0.023 million tons (including internal self-supply), a year-on-year increase of approximately 13%, and nickel product shipments were approximately 0.076 million tons (including internal self-supply), a year-on-year increase of more than 40%.

As for the demand side, Huayou Cobalt said that due to the cost reduction of batteries, lithium iron phosphate batteries have seized some market share with their low cost advantages, and the proportion of ternary batteries installed has declined. However, high-nickel and high-voltage ternary materials have significant advantages in energy density, lightweighting, and low-temperature performance. With the significant decline in core metal raw material prices such as nickel, cobalt, and lithium, the market share of ternary materials is expected to rebound. At the same time, under the trend of industrial technology paths towards high energy density development in new energy vehicles, energy storage systems and eVTOL low-altitude aircraft industries, high-nickel ternary batteries are expected to be accelerated promoted and popularized, and the demand for nickel sulfate and upstream nickel raw materials is expected to recover rapidly.

Specifically, in January-June this year, the company's shipment volume of lithium-ion cathode precursor was 0.067 million tons (including ternary precursor and tricobalt tetroxide, including internal self-supply), a year-on-year increase of about 11%; sodium-ion precursor shipments achieved a hundred-ton breakthrough; cathode material shipments were 0.053 million tons (including internal self-supply and participation in joint-stock companies), a year-on-year decrease, but with a Q2 growth rate of over 20% compared to the previous quarter; cobalt product shipments were approximately 0.023 million tons (including internal self-supply), a year-on-year increase of approximately 13%; and nickel product shipments were approximately 0.076 million tons (including internal self-supply), a year-on-year increase of more than 40%.

In terms of demand, Huayou Cobalt said that due to the cost reduction of batteries, lithium iron phosphate batteries have seized some market share with their low cost advantages, and the proportion of ternary batteries installed has declined. However, high-nickel and high-voltage ternary materials have significant advantages in energy density, lightweighting, and low-temperature performance. With the significant decline in core metal raw material prices such as nickel, cobalt, and lithium, the market share of ternary materials is expected to rebound. At the same time, under the trend of industrial technology paths towards high energy density development in new energy vehicles, energy storage systems and eVTOL low-altitude aircraft industries, high-nickel ternary batteries are expected to be accelerated promoted and popularized, and the demand for nickel sulfate and upstream nickel raw materials is expected to recover rapidly.

From the cost side, Huayou Cobalt's operating costs in the first half of the year decreased by 11.63% year-on-year to 2.507 billion yuan. Among them, there were significant changes in both management expenses and financial expenses: the former was 0.95 billion yuan, a year-on-year decrease of 14.88%, mainly due to the lower staff costs and share-based payment expenses; the latter was 1.07 billion yuan, a year-on-year increase of 98.64%, which the company attributed to a decrease in exchange gains.

Huayou Cobalt's mid-year report data shows that as of June 30, 2024, the company had monetary funds of 19.003 billion yuan, accounts receivable of 6.77 billion yuan, and inventory of 14.213 billion yuan; at the same time, the company's total liabilities were 84.929 billion yuan, and the asset-liability ratio was 64.71%.

As of the close of August 19th, Huayou Cobalt's stock price was 22.25 yuan, and the company's latest market value was approximately 37.8 billion yuan, less than one-third of its peak market value.