Financial Services Association, October 18 (Reporter Wang Bin) Thanks to a double rise in the volume and price of nickel products, the profitability of Huayou Cobalt (603799.SH), a leader in the new energy lithium battery materials industry, began to stop falling and stabilized. Net profit in Q3 this year reached the highest level in history.

This evening, Huayou Cobalt announced that in the first three quarters of this year, the company achieved operating income of 45.488 billion yuan, a year-on-year decrease of 10.97%; net profit attributable to shareholders of listed companies was 3.02 billion yuan, an increase of 0.24% over the previous year. During the reporting period, the net cash flow from the company's operating activities was 3.84 billion yuan, an increase of 54.65% over the previous year, due to improved sales repayment efficiency.

According to the three-quarter report, in the Q3 single quarter, Huayou Cobalt achieved revenue of 15.438 billion yuan, a year-on-year decrease of 13%; net profit to mother was 1.35 billion yuan, an increase of 45.42% year-on-year, the best in the same period in history.

Regarding the increase in profits, Huayou Cobalt explained that the upstream nickel resource development project gradually reached production during the reporting period, and the results of the integrated industrial management strategy gradually became apparent. In addition, according to Huayou Cobalt's 2024 interim report, the company shipped 0.076 million tons of nickel products in the first half of this year, an increase of 40% over the previous year; shipments of nickel intermediates were about 0.112 million tons, an increase of more than 90% over the previous year.

Affected by the “cold winter” of the lithium battery industry, several brokerage agencies previously predicted that the company's net profit for the full year 2024 would be about 3.423 billion yuan. Looking at it now, Huayou Cobalt's net profit in the first three quarters of this year reached 90% of last year's net profit of 3.351 billion yuan. Not surprisingly, the company's full year results may have exceeded market expectations.

In terms of gross margin, in the first three quarters of 2024, Huayou Cobalt's gross margin was 17.53%, up 2.64 percentage points from the previous year. Judging from the single-quarter indicators, the Q3 company's gross margin was 19.42%, up 4.57 percentage points year on year and down 1.58 percentage points from the previous quarter.

It is worth noting that in the first three quarters of this year, the company's financial expenses reached 1.945 billion yuan, an increase of 88.64% over the previous year, of which 1.648 billion yuan was interest expenses. At the same time, the company's sales expenses decreased by 10.66% year on year, management expenses decreased by 16.97% year on year, and R&D expenses decreased by 8.66% year on year.

Based on the analysis of the company's debt situation, the sharp increase in Huayou Cobalt's financial expenses may be related to the company's high balance ratio. As of the end of September 2024, the total debt of the company was 84.736 billion yuan, and the balance ratio reached 64.08%. Among them, short-term loans were 20.668 billion yuan, an increase of 5.619 billion yuan over the beginning of the year, long-term loans of 20.041 billion yuan, and debt payments of 6.854 billion yuan. In terms of contract liabilities, Huayou Cobalt's contract debt during the same period was 1.016 billion yuan, a year-on-year decrease of 24.4%, which means that dealers' willingness to pay has declined.

Analysts believe that in recent years, the Huayou Cobalt industry is at the peak of capacity expansion. If future production capacity can deliver results, it will support the company's revenue and net profit growth; once the industry enters a downward cycle, such a heavy asset scale may become a heavy burden.