Incident: According to SMM data, the LME nickel price was 0.0161 million/ton on September 19, +1.48% week over week. Since entering the third quarter, nickel prices have declined somewhat, down 12.61% from the average nickel price of 0.0184 million/ton in Q2.

The company's Qingmeibang Phase II was officially opened, and nickel resource production capacity is expected to be released centrally in Q4. On September 10, Qingmeibang Nickel Resources Phase II hydrometallurgy (1,168m? The opening ceremony of the (Reactor) (HPAL) production line was successfully held at the IMIP Park. By completing independent process optimization, the Qingmeibang laterite nickel ore hydrometallurgical smelting project was expanded from the first phase with an annual output of 0.04 million gold tons of nickel/year to a total production capacity of 0.065 million gold tons of nickel/year. The first phase of the project has fully produced 0.04 million gold tons of nickel/year, and the gross margin of 24H1's nickel resources sector reached 30.16%, with excellent profitability.

At present, the company's completed and ongoing nickel smelting production capacity is 0.15 million gold tons of nickel/year. Among them, Qingmeibang has a total production capacity of 0.065 million gold tons of nickel/year, the total production capacity of the Meiming project controlled by the company is 0.025 million gold tons of nickel/year, and the total production capacity of the participating ESG project is progressing steadily, and the total production capacity of 0.04 million gold tons of nickel/year is expected to be launched and gradually released in Q4. 24H1 shipped 0.0207 million gold tons of nickel resources, +101% year over year. We expect annual shipments to reach 0.06 million gold tons. The company continues to reduce costs through process optimization and efficient maintenance, and the overall profit level is expected to remain stable.

The trade-in policy promotes high growth in the recycling business, and the company strives to build an ecosystem for the entire life cycle of new energy sources. In March 2024, the State Council officially issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In”, which aims to promote the centralized scrapping of end-of-life cars, white goods, power batteries, and large equipment.

24H1's recycling business increased year-on-year, with power battery recycling of 0.0163 million tons, +36.72%; the tungsten resource business achieved sales of 0.769 billion yuan, +60.18%; the scrap car business achieved sales of 0.414 billion yuan, +99.42% year over year; and the cobalt recycling business achieved sales of 1.579 billion yuan, +124.57% year over year.

The company has set up 16 green recycling and waste recycling treatment bases with electronic waste, end-of-life vehicles, and decommissioned power batteries in 11 provinces and cities across the country to create a “battery recycling - resource recycling - material recycling - battery cascade utilization” new energy life cycle value chain model with global battery manufacturers and new energy vehicle manufacturers.

Investment advice: We expect the company's net profit to be 1.567/2.362/2.917 billion yuan in 24-26, +67.7%/+50.7%/+23.5% year-on-year, and the corresponding EPS of 0.31/0.46/0.57 yuan, respectively, maintaining the “gain” rating.

Risk warning: downstream demand falls short of expectations; nickel and cobalt prices fluctuate sharply; project progress falls short of expectations.